<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
(MARK
ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition period from to
COMMISSION FILE NUMBER 333-04261
AMERIKING, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OR OTHER JURISDICTION
OF INCORPORATION OR ORGANIZATION)
2215 ENTERPRISE DRIVE, SUITE 1502
WESTCHESTER, ILLINOIS
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
36-3970707
(I.R.S. EMPLOYER
IDENTIFICATION NO.)
60154
(ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE 708-947-2150
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
The number of shares outstanding of each of the registrant's classes of
common stock as of May 1, 1997 was 893,290 of common stock, $.01 par value per
Share (the "Common Stock").
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PART I
Item 1. Financial Statements............................................
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................................... 9
PART II
Item 6. Exhibits, and Reports on Form 8-K............................... 13
</TABLE>
<PAGE>
PART I
Certain statements in this Form 10-K may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors which may cause the actual results,
performance, or achievements of AmeriKing, Inc. ("AmeriKing" or the "Company")
to be materially different from any future results, performance, or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: general economic and business
conditions; competition; success of operating initiatives; development and
operating costs; advertising and promotional efforts; brand awareness; adverse
publicity; acceptance of new product offerings; availability, locations, and
terms of sites for store development; changes in business strategy or
development plans; quality of management; availability, terms, and deployment
of capital; business abilities and judgment of personnel; availability of
qualified personnel; food, labor, and employee benefit costs; changes in, or
the failure to comply with, governmental regulations; regional weather
conditions; construction schedules; and other factors referenced in this Form
10-Q.
RECENT DEVELOPMENTS
During the third quarter the Company executed purchase agreements pursuant to
which it may acquire up to 30 Burger King restaurants in the Charlotte, North
Carolina area (the "Charlotte Acquisition") and up to two Burger King
restaurants in the Chicago, Illinois area (the "Illinois Acquisition")
(collectively the "Acquisitions") from two franchisees for an aggregate
purchase price of $27.5 million and $565,000 respectively. The Acquisitions
will be funded through the use of the available credit under the Third Amended
and Restated Revolving Credit Agreement. The Charlotte Acquisition and the
Illinois Acquisition will be accounted for under the purchase method of
accounting. The Acquisitions are conditioned on, among other things, both of
the Company and the Sellers' obtaining the consent of Burger King Corporation
("BKC") as well as other closing conditions. It is anticipated that the key
operating personnel of the restaurants acquired in the Charlotte Acquisition
will be retained. Pursuant to the terms of BKC's standard franchise agreements,
acquisitions of Burger King restaurants, including those to be acquired in the
Acquisitions, are subject to BKC's consent and right of first refusal.
1
<PAGE>
ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS OF AMERIKING, INC. AND
SUBSIDIARY
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Consolidated Balance Sheets as of June 30, 1997 and December 30, 1996.....
Consolidated Statements of Operations for the quarters ended June 30, 1997
and July 1, 1996.........................................................
Consolidated Statements of Operations for the periods December 31, 1996 to
June 30, 1997 and
January 2, 1996 to July 1, 1996..........................................
Consolidated Statements of Cash Flows for the period December 31, 1996 to
June 30, 1997 and
January 2, 1996 to July 1, 1996..........................................
Notes to Consolidated Financial Statements................................
</TABLE>
2
<PAGE>
AMERIKING, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 30, 1996
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 30,
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents......................... $ 4,647,000 $ 5,259,000
Accounts receivable............................... 746,000 828,000
Inventories....................................... 1,455,000 1,667,000
Prepaid expenses.................................. 1,376,000 1,338,000
Current portion of deferred income taxes.......... 438,000 438,000
------------ ------------
Total current assets............................ 8,662,000 9,530,000
PROPERTY AND EQUIPMENT.............................. 45,288,000 36,765,000
GOODWILL............................................ 108,613,000 94,324,000
DEFERRED INCOME TAXES............................... 3,426,000 3,426,000
OTHER ASSETS:
Deferred financing costs.......................... 7,015,000 6,577,000
Deferred organization costs....................... 141,000 170,000
Franchise agreements.............................. 4,662,000 4,245,000
------------ ------------
Total other assets.............................. 11,818,000 10,992,000
------------ ------------
TOTAL............................................... $177,807,000 $155,037,000
============ ============
LIABILITIES, SENIOR PREFERRED STOCK
AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and other accrued expenses....... $ 11,831,000 $ 10,333,000
Accrued payroll................................... 3,432,000 3,571,000
Accrued sales tax payable......................... 970,000 1,021,000
Accrued interest payable.......................... 1,007,000 911,000
Current portion of long-term debt................. 550,000 525,000
Current portion of capital leases................. 113,000 110,000
------------ ------------
Total current liabilities....................... 17,903,000 16,471,000
LONG-TERM DEBT--Less current portion................ 128,194,000 107,167,000
LONG-TERM DEBT--Related parties..................... 600,000 600,000
OTHER LONG-TERM LIABILITIES......................... 15,000 63,000
------------ ------------
Total liabilities............................... 146,712,000 124,301,000
SENIOR PREFERRED STOCK.............................. 32,264,000 30,303,000
STOCKHOLDERS' EQUITY:
Preferred stock................................... 75 75
Common stock...................................... 8,933 8,933
Additional paid-in capital........................ 5,256,992 7,277,992
Retained earnings (deficit)....................... (6,435,000) (6,854,000)
------------ ------------
Total stockholders' equity...................... (1,169,000) 433,000
TOTAL............................................... $177,807,000 $155,037,000
============ ============
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
AMERIKING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE PERIODS ENDED JUNE 30, 1997 AND JULY 1, 1996
<TABLE>
<CAPTION>
APRIL 1, APRIL 2,
1997 TO 1996 TO
JUNE, 30 % OF JULY 1 % OF
1997 SALES 1996 SALES
----------- ------ ----------- -----
<S> <C> <C> <C> <C>
SALES
Restaurant food sales............... $52,442,000 96.4% $52,399,000 97.9%
Non-food sales...................... 1,953,000 3.6 1,144,000 2.1
----------- ------ ----------- -----
Total sales....................... 54,395,000 100.00 53,543,000 100.0
RESTAURANT OPERATING EXPENSES:
Cost of food sales.................. 15,979,000 29.4 16,250,000 30.3
Cost of non-food sales.............. 1,831,000 3.4 1,055,000 2.0
Restaurant labor and related costs.. 13,375,000 24.6 13,250,000 24.7
Occupancy........................... 5,752,000 10.6 5,566,000 10.4
Depreciation and amortization of
goodwill and franchise
agreements......................... 2,085,000 3.8 1,856,000 3.5
Advertising......................... 2,823,000 5.2 2,582,000 4.8
Royalties........................... 1,836,000 3.4 1,837,000 3.4
Loss on disposition of equipment.... 650,000 1.2
Other operating expenses............ 4,531,000 8.3 4,376,000 8.2
----------- ------ ----------- -----
Total restaurant operating
expenses......................... 48,862,000 89.9 46,772,000 87.3
GENERAL AND ADMINISTRATIVE EXPENSES... 2,175,000 4.0 1,842,000 3.4
OTHER OPERATING EXPENSES:
Depreciation expense--office........ 144,000 0.3 113,000 0.2
Gain on sale of restaurants......... (1,866,000) (3.4)
Loss on disposal of fixed assets.... 48,000 0.1
Management and directors' fees...... 192,000 0.4 197,000 0.4
----------- ------ ----------- -----
Total other operating expenses.... (1,482,000) (2.6) 310,000 0.6
----------- ------ ----------- -----
OPERATING INCOME...................... 4,840,000 8.7 4,619,000 8.7
OTHER INCOME (EXPENSE):
Interest expense.................... (2,975,000) (5.5) (2,053,000) (3.8)
Interest expense--related party..... (9,000) (965,000) (1.8)
Amortization of deferred costs...... (152,000) (0.3) (255,000) (0.5)
Other income (expense)--net ........ 58,000 0.1 (9,000)
----------- ------ ----------- -----
Total other expense............... (3,078,000) (5.7) (3,282,000) (6.1)
----------- ------ ----------- -----
INCOME BEFORE PROVISION FOR INCOME
TAXES................................ 1,762,000 3.0 1,337,000 2.6
INCOME TAX PROVISION.................. 705,000 1.3 548,000 1.0
----------- ------ ----------- -----
NET INCOME............................ $ 1,057,000 1.7% $ 789,000 1.6%
=========== ====== =========== =====
PREFERRED STOCK DIVIDENDS (cumulative,
undeclared).......................... $ 1,017,000
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING.......................... 999.99 999.99
NET INCOME PER COMMON SHARE........... $ 0.60 $ 1.26
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
AMERIKING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX PERIODS ENDED JUNE 30, 1997 AND JULY 1, 1996
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 2,
1996 TO 1996 TO
JUNE 30, % OF JULY 1, % OF
1997 SALES 1996 SALES
------------ ----- ----------- -----
<S> <C> <C> <C> <C>
SALES
Restaurant food sales............... $100,634,000 97.0% $94,650,000 97.9%
Non-food sales...................... 3,154,000 3.0 1,996,000 2.1
------------ ----- ----------- -----
Total sales....................... 103,788,000 100.0 96,646,000 100.0
RESTAURANT OPERATING EXPENSES:
Cost of food sales.................. 30,571,000 29.5 29,450,000 30.5
Cost of non-food sales.............. 2,970,000 2.9 1,888,000 2.0
Restaurant labor and related costs.. 26,318,000 25.4 24,309,000 25.2
Occupancy........................... 11,425,000 11.0 10,383,000 10.7
Depreciation and amortization of
goodwill and franchise
agreements......................... 4,077,000 3.9 3,525,000 3.6
Advertising......................... 5,399,000 5.2 4,676,000 4.8
Royalties........................... 3,525,000 3.4 3,316,000 3.4
Loss on disposition of equipment.... 650,000 0.6
Other operating expenses............ 9,018,000 8.7 8,087,000 8.4
------------ ----- ----------- -----
Total restaurant operating
expenses......................... 93,953,000 90.6 85,634,000 88.6
GENERAL AND ADMINISTRATIVE EXPENSES... 4,148,000 4.0 3,563,000 3.7
OTHER OPERATING EXPENSES:
Depreciation expense--office........ 277,000 0.3 206,000 0.2
Gain on sale of restaurants......... (1,866,000) (1.8)
Loss on disposal of fixed assets.... 71,000 0.1
Management and directors' fees...... 315,000 0.3 315,000 0.3
------------ ----- ----------- -----
Total other operating expenses.... (1,203,000) (1.1) 521,000 0.5
------------ ----- ----------- -----
OPERATING INCOME. 6,890,000 6.5 6,928,000 7.2
OTHER INCOME (EXPENSE):
Interest expense.................... (5,911,000) (5.7) (4,003,000) (4.1)
Interest expense--related party..... (18,000) (1,757,000) (1.8)
Amortization of deferred costs...... (304,000) (0.3) (479,000) (0.5)
Other income (expense)--net ........ 42,000 (12,000)
------------ ----- ----------- -----
Total other expense............... (6,191,000) (6.0) (6,251,000) (6.4)
------------ ----- ----------- -----
INCOME BEFORE PROVISION FOR INCOME
TAXES................................ 699,000 0.5 677,000 0.8
INCOME TAX PROVISION.................. 280,000 0.3 277,000 .03
------------ ----- ----------- -----
NET INCOME............................ $ 419,000 0.2% $ 400,000 0.5%
============ ===== =========== =====
PREFERRED STOCK DIVIDENDS (cumulative,
undeclared).......................... $ 2,002,000
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING.......................... 897.34 999.99
NET LOSS PER COMMON SHARE............. $ (1.77) $ 0.47
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
AMERIKING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX PERIODS ENDED JUNE 30, 1997 AND THE FISCAL YEAR ENDED DECEMBER 30,
1996
<TABLE>
<CAPTION>
ADDITIONAL RETAINED
PREFERRED COMMON PAID-IN EARNINGS
STOCK STOCK CAPITAL (DEFICIT) TOTAL
--------- ------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INITIAL ISSUANCE OF
STOCK.................. $56 $ 10 $ 5,699,934 $ 5,700,000
Issuance of preferred
stock................ 19 1,899,981 1,900,000
Net income............ $ 241,000 241,000
--- ------ ----------- ----------- -----------
BALANCE--December 31,
1994................... 75 10 7,599,915 241,000 7,841,000
Net income............ 902,000 902,000
--- ------ ----------- ----------- -----------
BALANCE--January 1,
1996................... 75 10 7,599,915 1,143,000 8,743,000
Dividends on senior
preferred stock...... (303,000) (303,000)
Amortization of senior
preferred stock
issuance costs....... (10,000) (10,000)
Recapitalization of
common stock......... 8,923 (8,923)
Net loss.............. (7,997,000) (7,997,000)
--- ------ ----------- ----------- -----------
BALANCE--December 30,
1996................... 75 8,933 7,277,992 (6,854,000) 433,000
Dividends on senior
preferred stock...... (1,961,000) (1,961,000)
Amortization of senior
preferred stock
issuance costs....... (60,000) (60,000)
Net income............ 419,000 419,000
--- ------ ----------- ----------- -----------
BALANCE--June 30, 1997.. $75 $8,933 $ 5,256,992 $(6,435,000) $(1,169,000)
=== ====== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
6
<PAGE>
AMERIKING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX PERIODS ENDED JUNE 30, 1997 AND JULY 1, 1996
<TABLE>
<CAPTION>
DECEMBER 31,
1996 JANUARY 2,
JUNE 30, 1996
1997 JULY 1, 1996
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income......................................... $ 419,000 $ 400,000
Adjustments to reconcile net income (loss) to net
cash flows from operating activities:
Depreciation and amortization.................... 4,658,000 4,210,000
Provision for disposition of equipment........... 650,000
Gain on sale of restaurants...................... (1,866,000)
Changes in:
Accounts receivable............................ 82,000 193,000
Inventories.................................... 212,000 (766,000)
Prepaid expenses............................... (38,000) (1,512,000)
Accounts payable and accrued expenses.......... 1,404,000 5,864,000
------------ ------------
Net cash flows from operating activities..... 5,521,000 8,389,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of restaurant franchise agreements,
equipment and goodwill.......................... (26,642,000) (39,415,000)
Cash paid for franchise agreements............... (152,000) (81,000)
Cash paid for property and equipment............. (7,732,000) (2,837,000)
Proceeds from sale of restaurants................ 8,158,000 816,000
------------ ------------
Net cash flows from investing activities..... (26,368,000) (41,517,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt..................... 21,308,000 85,000,000
Proceeds from subordinated debt-related party.... 15,000,000
Cash paid for financing costs.................... (772,000) (2,688,000)
Advances under line of credit.................... 5,000,000
Payments on line of credit....................... (1,500,000)
Payments on long-term debt....................... (256,000) (66,341,000)
Payments on capital leases....................... (45,000) (52,000)
------------ ------------
Net cash flows from financing activities..... 20,235,000 34,419,000
------------ ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS............ (612,000) 1,291,000
CASH AND CASH EQUIVALENTS--Beginning of period..... 5,259,000 1,887,000
------------ ------------
CASH AND CASH EQUIVALENTS--End of period........... $ 4,647,000 $ 3,178,000
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest......... $ 5,833,000 $ 5,081,000
============ ============
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Senior preferred stock dividends (cumulative, non-
declared)......................................... $ 2,002,000
============
</TABLE>
See notes to consolidated financial statements.
7
<PAGE>
AMERIKING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all of the adjustments necessary (consisting of
normal and recurring accruals) to present fairly the Company's financial
position as of June 30, 1997 and December 30, 1996, the results of operations
for the three and six periods ended June 30, 1997 and July 1, 1997 and cash
flows for six periods ended June 30, 1997 and July 1, 1996. These financial
statements should be read in conjunction with the Company's annual report on
Form 10K for the fiscal year ended December 30, 1996 filed on March 28, 1997.
The results of operations for the three and six periods ended June 30, 1997
and July 1, 1996 are not necessarily indicative of the results to be expected
for the full fiscal year.
On June 16, 1997, the Company successfully completed the acquisition of 26
restaurants in the Fayetteville and Raleigh Durham areas (the "North Carolina
Acquisition") from a franchisee for an aggregate purchase price of
approximately $26.6 million including acquisition related real estate.
Inventories--Inventories consist primarily of restaurant food and supplies
and are stated at the lower of cost or market. Cost is determined using the
first-in, first-out (FIFO) method.
Net Income (Loss) Per Common Share--Net income per share was computed by
deducting from the Company's net income dividends payable to the holders of
Class A1, Class A2 and Class B Preferred Stock (collectively, the "Preferred
Stock") and 13% Senior Exchangeable Preferred Stock due 2008, (the "Senior
Preferred Stock"), and amortization of the issuance costs on the Senior
Preferred Stock and using the weighted average number of common stock of the
Company (the "Common Stock"), and common stock equivalent shares outstanding on
a post-split basis.
Pro Forma Operating Results (Unaudited)--The following are the pro forma
operating results for three and six periods ended June 30, 1997 and July 1,
1996 as if the North Carolina acquisition by the Company had occurred on
January 2, 1996. The pro forma results give effect to changes in depreciation
and amortization resulting from valuing property and franchise agreements at
their estimated fair value and recording the excess of purchase price over the
net assets acquired (000's omitted):
<TABLE>
<CAPTION>
SIX PERIODS THREE PERIODS
--------------------- ---------------
APRIL
JANUARY 1, APRIL
DECEMBER 31, 2, 1997 TO 2,
1996 TO 1996 TO JUNE 1996 TO
JUNE 30, JULY 1, 30, JULY 1,
1997 1996 1997 1996
------------ -------- ------- -------
<S> <C> <C> <C> <C>
Net Sales.......................... $120,527 $113,138 $61,480 $60,635
Income from operations............. $ 14,099 $ 13,375 $ 8,460 $ 7,834
</TABLE>
The pro forma results of operations are not necessarily indicative of the
actual operating results that would have occurred had the acquisitions been
consummated at the beginning of the respective periods.
2. LONG-TERM DEBT
On June 16, 1997, the Company amended and restated its Second Amended and
Restated Credit Agreement (the "Third Amended and Restated Revolving Credit
Agreement") to provide for an increased commitment under its revolving credit
facility (the "Revolver"). Under the Third Amended and Restated Revolving
Credit Agreement, FNBB and the other lenders thereto committed to increase the
borrowing capacity of the Revolver from $15 million to $50 million. Pursuant to
the terms of the Third Amended and Restated Revolving Credit Agreement, the
interest rate, amortization schedule and maturity of the Revolver were revised.
Interest is calculated as the lesser of the base rate or the Eurodollar rate
and is payable, at a minimum, quarterly. The Third Amended and Restated
Revolving Credit Agreement calls for no principal amortization and matures in
June 2002. On June 16, 1997, $21.3 million was borrowed against the Revolver to
finance the North Carolina Acquisition.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The Company operates Burger King restaurants through its wholly owned
subsidiaries, each of which is a party to a BKC franchise agreement. BKC
franchise agreements require a one-time franchise fee (currently $40,000), a
monthly royalty fee of 3.5% of each restaurant's gross sales and a monthly
advertising contribution of 4.0% of gross sales. Most franchise agreements
provide for a term of 20 years, and, at the option of the franchise and BKC, a
renewal franchise agreement may be granted by BKC upon payment of the then
current franchise fee provided that the restaurant meets BKC's operating
standards applicable at that time and the franchisee is not in default under
the relevant franchise agreement. In addition, the Company has reached a
separate agreement with BKC in which the Company has committed to spend 1% of
gross sales on local advertising to supplement BKC's national advertising
activities.
As the Company acquires additional Burger King restaurants, it capitalizes
the value of franchise agreements based on the number of years remaining on
the terms of the agreement and the franchise fee in effect at the time of
acquisition (currently, $40,000 over a 20 year term or $2,000 per year) and it
capitalizes excess cost over fair value of the other net assets acquired and
amortizes goodwill expense for financial statement purposes over a 35-year
period. The Company generally purchases assets and is able to deduct goodwill
amortization expense for tax purposes over a 15-year period.
Restaurant sales include food sales and merchandise sales. Merchandise sales
include convenience store sales at the Company's dual-use facilities (of which
the Company currently has ten), as well as sales of promotional products at
the Company's restaurants. Historically, merchandise sales have contributed
less than 3.0% to restaurant sales. Promotional products, which account for
the majority of merchandise sales, are generally sold at or near the Company's
costs.
EBITDA represents operating income plus depreciation and amortization
(including losses on disposal of fixed assets, losses on disposition of
equipment less gain on sale of restaurants) and management and director's
fees. While EBITDA should not be construed as a substitute for operating
income or a better indicator of liquidity than cash flow from operating
activities, which are determined in accordance with generally accepted
accounting principles, EBITDA is included to provide additional information
with respect to the ability of the Company to meet its future debt service,
capital expenditure and working capital requirements. In addition, management
believes that certain investors find EBITDA to be a useful tool for measuring
the ability of the Company to service its debt. EBITDA is not necessarily a
measure of the Company's ability to fund its cash needs. See the Consolidated
Statements of Cash Flows of the Company and the related notes to the
Consolidated Financial Statements included herein.
The Company includes in the comparable restaurant sales analysis discussed
below only those restaurants that have been in operation for a minimum of
thirteen months. For a restaurant not operating for the entire prior annual
period, the sales for the interim period in the prior year are compared to
that for the comparable interim period in the indicated year.
THREE PERIODS ENDED JUNE 30, 1997 COMPARED TO QUARTER ENDED JULY 1, 1996
Restaurant Sales. Total sales increased $0.9 million or 1.6% during the
three periods ended June 30, 1997, to $54.4 million from $53.5 million during
the three periods ended July 1, 1996, due primarily to the inclusion of the 26
restaurants purchased on June 16, 1997. In addition, the Company developed 5
restaurants, sold 10 restaurants, and closed 2 restaurants in 1997. Newly
acquired restaurants accounted for $1.3 million of the total increase in
restaurant sales, while new restaurant development accounted for $2.9 million
of the increase in sales. Sales at the comparable restaurants owned by the
Company for the three periods ended June 30, 1997 decreased $0.6 million or
(1.2%). Total sales were reduced by $2.4 million due the 10 restaurants sold
and $0.3 million due to the restaurants closed during the three periods.
9
<PAGE>
Restaurant Operating Expenses. Total restaurant operating expenses increased
$2.1 million, or 4.5% during the three periods ended June 30, 1997, to $48.9
million from $46.8 million during the three months ended July 1, 1996. As a
percentage of sales, restaurant operating expenses increased 2.6% to 89.9%
during the three periods ended June 30, 1997 from 87.3% during the three
periods ended July 1, 1996.
Cost of sales increased $0.5 million during the three periods ended June 30,
1997, and increased 0.5% as a percentage of sales to 32.8% during the three
periods ended June 30, 1997 from 32.3% during the three periods ended July 1,
1996. The percentage increase in cost of sales was due to a 1.4% increase in
the cost of non-food sales offset by a 1.0% decrease on the cost of food sales,
primarily as a result of a lower level of discounting and improved cost
controls.
Restaurant labor and related expenses increased $0.1 million during the three
periods ended June 30, 1997, and decreased 0.1% as a percentage of restaurant
sales to 24.6% during the three periods ended July 1, 1996 from 24.7% during
the three periods ended July 1, 1996. The increase in restaurant labor was due
to an increase in the federal minimum wage offset by a $0.2 million decrease in
accrued payroll taxes.
Depreciation and amortization increased $0.2 million during the three periods
ended June 30, 1997, to $2.1 million during the three periods ended June 30,
1997 from $1.9 million during the three periods ended July 1, 1996. As a
percentage of sales, depreciation and amortization expense increased 0.3% to
3.8% during the three periods ended June 30, 1997 from 3.5% during the three
periods ended July 1, 1996. The increase was due primarily to the increase in
goodwill amortization resulting from the purchase method of accounting for the
newly acquired restaurants.
Occupancy and other expenses increased $1.2 million during the three periods
ended June 30, 1997, and increased 1.9% as a percentage of sales to 28.7%
during the three periods ended June 30, 1997 from 26.8% during the three
periods ended July 1, 1996. Occupancy expense increased $0.2 million, and
increased 0.2% as a percentage of sales to 10.6% during the three periods ended
June 30, 1997 from 10.4% during the three periods ended July 1, 1996. Other
operating expenses increased $1.0 million during the three periods ended June
1, 1997, and increased 1.7% as a percentage of sales to 18.1% during the three
periods ended June 30, 1997 from 16.4% during the three periods ended July 1,
1996. This decrease is a primarily a result of the provision for disposition of
equipment of $0.7 million and an increase in local advertising pursuant to the
BKC Agreement.
EBITDA. Earnings before interest, taxes, depreciation, and amortization
decreased $0.6 million or 8.5% to $6.2 million for the three periods ended June
30, 1997 from $6.8 million for the three periods ended July 1, 1996. As a
percentage of restaurant sales, EBITDA decreased 1.3%, to 11.4% for the three
periods ended June 30, 1997 from 12.7% for the three periods ended July 1,
1996.
Operating Income. Operating income increased $0.9 or 18.9% to $5.5 million
during the three periods ended June 30, 1997 from $4.6 million during the three
periods ended July 1, 1996. As a percentage of sales, operating income
increased 1.2%, to 9.9% during the three periods ended June 30, 1997 from 8.7%
during the three periods ended July 1, 1996. This increase is a primarily a
result of the gain of $1.9 million realized upon the sale of the 10
restaurants.
SIX PERIODS ENDED JUNE 30, 1997 COMPARED TO QUARTER ENDED JULY 1, 1996
Restaurant Sales. Total sales increased $7.1 million or 7.4% during the six
periods ended June 30, 1997, to $103.8 million from $96.7 million during the
six periods ended July 1, 1996, due primarily to the inclusion of the 26
restaurants purchased on June 16, 1997. In addition, the Company developed 5
restaurants, sold 10 restaurants, and closed 2 restaurants in 1997. Newly
acquired restaurants accounted for $4.8 million of the total increase in
restaurant sales, while new restaurant development accounted for $4.6 million
of the increase in sales. Sales at the comparable restaurants owned by the
Company for the six periods ended June 30, 1997 increased $0.4 million or 0.4%.
Total sales were reduced by $2.4 million due the 10 restaurants sold and $0.3
million due to the restaurants closed during the six periods.
10
<PAGE>
Restaurant Operating Expenses. Total restaurant operating expenses increased
$8.3 million, or 9.7% during the six periods ended June 30, 1997, to $93.9
million from $85.6 million during the six months ended July 1, 1996, due
primarily to the inclusion of the 26 restaurants purchased on June 16, 1997.
In addition, the company developed 5 restaurants, sold 10 restaurants and
closed 2 restaurants in 1997. As a percentage of sales, restaurant operating
expenses increased 2.0% to 90.6% during the six periods ended June 30, 1997
from 88.6% during the six periods ended July 1, 1996.
Cost of sales increased $2.2 million during the six periods ended June 30,
1997, but decreased 0.1% as a percentage of sales to 32.4% during the six
periods ended June 30, 1997 from 32.5% during the six periods ended July 1,
1996. The increase in cost of sales was due to a 0.9% increase in the cost of
non-food sales offset by a 1.0% decrease on the cost of food sales, primarily
as a result of a lower level of discounting and improved cost controls.
Restaurant labor and related expenses increased $2.0 million during the six
periods ended June 30, 1997, and increased 0.2% as a percentage of restaurant
sales to 25.4% during the six periods ended July 1, 1996 from 25.2% during the
six periods ended July 1, 1996. The percentage increase in restaurant labor
was due to an increase in the federal minimum wage.
Depreciation and amortization increased $0.6 million during the six periods
ended June 30, 1997, to $4.1 million during the six periods ended June 30,
1997 from $3.5 million during the six periods ended July 1, 1996. As a
percentage of sales, depreciation and amortization expense increased 0.3% to
3.9% during the six periods ended June 30, 1997 from 3.6% during the six
periods ended July 1, 1996. The increase was due primarily to the increase in
goodwill amortization resulting from the purchase method of accounting for the
newly acquired restaurants.
Occupancy and other expenses increased $3.6 million during the six periods
ended June 30, 1997, and increased 1.6% as a percentage of sales to 28.9%
during the six periods ended June 30, 1997 from 27.3% during the six periods
ended July 1, 1996. Occupancy expense increased $1.0 million, and increased
0.3% as a percentage of sales to 11.0% during the six periods ended June 30,
1997 from 10.7% during the six periods ended July 1, 1996. Other operating
expenses increased $2.6 million during the six periods ended June 1, 1997, and
increased 1.3% as a percentage of sales to 17.9% during the six periods ended
June 30, 1997 from 16.6% during the six periods ended July 1, 1996. This
increase is primarily the result of the provision for disposition of equipment
of $0.7 million and an increase in local advertising pursuant to the BKC
Agreement.
EBITDA. Earnings before interest, taxes, depreciation, and amortization
decreased $0.4 million or 4.1% to $10.5 million for the six periods ended June
30, 1997 from $10.9 million for the six periods ended July 1, 1996. As a
percentage of restaurant sales, EBITDA decreased 1.3%, to 10.1% for the six
periods ended June 30, 1997 from 11.4% for the six periods ended July 1, 1996.
Operating Income. Operating income increased $0.6 million or 8.8% to $7.5
million during the six periods ended June 30, 1997 from $6.9 million during
the six periods ended July 1, 1996. As a percentage of sales, operating income
decreased 0.1%, to 7.1% during the six periods ended June 30, 1997 from 7.2%
during the six periods ended July 1, 1996. This increase is a primarily a
result of the gain of $1.9 million realized upon the sale of the 10 stores.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary cash requirements following its concurrent offerings
(together, the "Offerings") of $100.0 million of 10 3/4% Senior Notes due 2006
(the "Senior Notes") and $30.0 million of units (the "Units") consisting of
1.2 million shares of Senior Preferred Stock and 30,000 shares of Common Stock
will be used to finance additional acquisitions, capital expenditures in
connection with the development of new restaurants, upgrades of acquired and
existing restaurants and general working capital needs. The Company has
budgeted approximately $355,000 for the development of each of its new
restaurants. The Company anticipates it will spend approximately an additional
$3.0 to $5.0 million annually for other capital expenditures. In
11
<PAGE>
connection with certain of its previous acquisitions of Burger King
restaurants, the Company committed to expend up to $2.3 million by September 1,
1997 to upgrade the initial 68 Burger King restaurants it acquired. The Company
has met this commitment. In addition, the Company has committed to BKC that it
will make capital expenditures at its AmeriKing Tennessee Corporation I
restaurants of approximately $1.5 million on or before September 7, 1997, of
which approximately ninety percent had been made as of June 30, 1997. The
Company has further committed to BKC that for the foreseeable future (i) it
will make capital expenditures on its existing restaurants equal to 1% of its
gross sales and (ii) it will spend an amount equal to 1% of its gross sales on
local advertising. The Company has also committed to BKC that it will develop
17 restaurants in fiscal 1997. In the event the Company fails to develop at
least 14 restaurants in fiscal 1997, the Company will pay BKC $150,000. In
addition to the extent the Company develops 13 or fewer restaurants in fiscal
1997, the Company will be obligated to pay BKC $75,000 for each restaurant less
than 14 it fails to develop. The actual amount of the Company's cash
requirements for capital expenditures depends on, among other things, the
number of new restaurants opened or acquired and the costs associated with such
restaurants and the number of franchises subject to renewal and the costs
associated with bringing the related restaurants up to BKC's then current
design specifications in connection with these franchise renewals.
The Company is structured as a holding company with no independent
operations, as the Company's operations are conducted exclusively through its
wholly owned subsidiaries. The Company's only significant assets are the
capital stock of its subsidiaries. As a holding company, the Company's cash
flow, its ability to meet its debt service requirements and its ability to pay
cash dividends on the Senior Preferred Stock are dependent upon the earnings of
its subsidiaries and their ability to declare dividends or make other
intercompany transfers to the Company. Under the terms of the indenture
pursuant to which the Senior Notes were offered (the "Indenture"), the
Company's subsidiaries may incur certain indebtedness pursuant to agreements
that may restrict the ability of such subsidiaries to make such dividends or
other intercompany transfers necessary to service the Company's obligations,
including its obligations under the Senior Notes, the Senior Preferred Stock
and any 13% Subordinated Exchange Debentures due 2008 (the "Exchange
Debentures") the Company may exchange pursuant to the Indenture. The Indenture
restricts, among other things, the Company's and its Restricted Subsidiaries'
(as defined in the Indenture) ability to pay dividends or make certain other
restricted payments, including the payment of cash dividends on or the
redemption of the Senior Preferred Stock, to incur additional indebtedness, to
encumber or sell assets, to enter into transactions with affiliates, to enter
into certain guarantees of indebtedness, to make restricted investments, to
merge or consolidate with any other entity and to transfer or lease all or
substantially all of their assets. In addition, (I) the Company's Amended and
Restated Credit Agreement (as defined) with the First National Bank of Boston
and other lenders thereto contains other and more restrictive covenants and
prohibits the Company's subsidiaries from declaring dividends or making other
intercompany transfers to the Company in certain circumstances and (ii)
agreements reached with BKC contain restrictions with respect to dividend
payments and intercompany loans.
The Company believes that the proceeds from its Offerings, together with its
available credit of $28.7 million under its Amended and Restated Credit
Agreement and the Company's cash on hand, will be sufficient to cover its
working capital, capital expenditures, planned development and debt service
requirements for fiscal 1997. The Company expects that additional financing
will be required in connection with any significant acquisitions in the future.
12
<PAGE>
PART II
ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
EXHIBITS
The following exhibits are filed as part of this report.
<TABLE>
<C> <S>
2.34 STOCK PURCHASE AGREEMENT DATED JULY 22, 1997 among THE SHAREHOLDERS OF
B&J RESTAURANTS, INC., and NATIONAL RESTAURANT ENTERPRISES, INC.
10.54 THIRD AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT dated as of June
17, 1997 among NATIONAL RESTAURANT ENTERPRISES, INC., AMERIKING INC. and
BANKBOSTON, N.A.
</TABLE>
A list of exhibits included as part of this Form 10-Q or incorporated by
reference is set forth in the Index to Exhibits. Included in the Index to
Exhibits are the following exhibits which constitute management contracts or
compensatory plans or arrangements.
1. TJC Consulting Agreement
2. Jaro Employment Agreement
3. Osborn Employment Agreement
4. Hubert Employment Agreement
5. Aaseby Employment Agreement
6. Vasatka Employment Agreement
7. New Osborn Employment Agreement
REPORTS ON FORM 8-K
1. On July 14, 1997, the Company filed a Current Report on Form 8-K,
announcing under Item 2 the consummation of the purchase of 26 restaurants in
the Fayetteville and Raleigh Durham, North Carolina areas.
13
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WESTCHESTER, STATE OF
ILLINOIS.
Ameriking, Inc.
- -------------------------------------
-------------------------------------
Date Lawrence E. Jaro
Managing Owner, Chairman and Chief
Executive Officer
- -------------------------------------
-------------------------------------
Date Joel Aaseby
Chief Financial Officer and
Corporate Secretary (Principal
Financial and Accounting Officer)
14
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
1.1 FORM OF UNDERWRITING AGREEMENT FOR NOTES OFFERING.... *
1.2 FORM OF UNDERWRITING AGREEMENT FOR UNITS OFFERING.... *
2.1++ PURCHASE AND SALE AGREEMENT, DATED SEPTEMBER 1, 1994,
BETWEEN BURGER KING CORPORATION ("BKC") AND NATIONAL
RESTAURANT ENTERPRISES, INC. ("ENTERPRISES") (Filed
as exhibit 2.1 to AmeriKing's Registration Statement
(No. 333-04261) and incorporated herein by refer-
ence)................................................ *
2.2++ PURCHASE AND SALE AGREEMENT, DATED SEPTEMBER 1, 1994,
BETWEEN JARO ENTERPRISES, INC. AND AMERIKING, INC.
(FORMERLY KNOWN AS NRE HOLDINGS, INC.) ("AMERIKING")
(Filed as exhibit 2.2 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)........................................... *
2.3++ PURCHASE AND SALE AGREEMENT, DATED SEPTEMBER 1, 1994,
BETWEEN JARO RESTAURANTS, INC. AND AMERIKING (Filed
as exhibit 2.3 to AmeriKing's Registration Statement
(No. 333-04261) and incorporated herein by refer-
ence)................................................ *
2.4++ PURCHASE AND SALE AGREEMENT, DATED SEPTEMBER 1, 1994,
BETWEEN TABOR RESTAURANTS ASSOCIATES, INC. AND
AMERIKING (Filed as exhibit 2.4 to AmeriKing's Regis-
tration Statement (No. 333-04261) and incorporated
herein by reference)................................. *
2.5++ PURCHASE AND SALE AGREEMENT, DATED SEPTEMBER, 1,
1994, BETWEEN JB RESTAURANTS, INC. AND AMERIKING
(Filed as exhibit 2.5 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)........................................... *
2.6++ PURCHASE AND SALE AGREEMENT, DATED SEPTEMBER 1, 1994,
BETWEEN CASTLEKING, INC. AND AMERIKING (Filed as ex-
hibit 2.6 to AmeriKing's Registration Statement (No.
333-04261) and incorporated herein by reference)..... *
2.7++ PURCHASE AND SALE AGREEMENT, DATED SEPTEMBER 1, 1994,
BETWEEN OSBURGER, INC. AND AMERIKING (Filed as ex-
hibit 2.7 to AmeriKing's Registration Statement (No.
333-04261) and incorporated herein by reference)..... *
2.8++ PURCHASE AND SALE AGREEMENT, DATED SEPTEMBER 1, 1994,
BETWEEN WHITE-OSBORN RESTAURANTS, INC. AND AMERIKING
(Filed as exhibit 2.8 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)........................................... *
2.9++ PURCHASE AND SALE AGREEMENT, DATED NOVEMBER 30, 1994,
BY AND AMONG SHELDON T. FRIEDMAN, BNB LAND VENTURE,
INC. AND ENTERPRISES (Filed as exhibit 2.9 to
AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................ *
2.10++ ASSET PURCHASE AGREEMENT, DATED JULY 5, 1995, BY AND
AMONG DMW, INC., DANIEL L. WHITE AND AMERIKING COLO-
RADO CORPORATION I (Filed as exhibit 2.10 to
AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................ *
2.11++ ASSET PURCHASE AGREEMENT, DATED JULY 5, 1995, BY AND
AMONG WSG, INC., DANIEL L. WHITE, SUSAN J. WAKEMAN,
GEORGE ALAIZ, JR. AND AMERIKING COLORADO CORPORATION
I (Filed as exhibit 2.11 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)........................................... *
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
2.12++ PURCHASE AGREEMENT, DATED NOVEMBER 21, 1995, BY AND
AMONG QSC, INC., THE SHAREHOLDERS OF QSC, INC. AND
AMERIKING TENNESSEE CORPORATION I (Filed as exhibit
2.12 to AmeriKing's Registration Statement
(No. 333-04261) and incorporated herein by refer-
ence)................................................ *
2.13++ PURCHASE AGREEMENT, DATED NOVEMBER 21, 1995, BY AND
AMONG RO-LANK, INC., THE SHAREHOLDERS OF RO-LANK,
INC. AND AMERIKING TENNESSEE CORPORATION I (Filed as
exhibit 2.13 to AmeriKing's Registration Statement
(No. 333-04261) and incorporated herein by refer-
ence)................................................ *
2.14++ PURCHASE AND SALE AGREEMENT, DATED NOVEMBER 30, 1995,
BY AND AMONG C&N DINING, INC. AND AFFILIATES AND
AMERIKING VIRGINIA CORPORATION I (Filed as exhibit
2.14 to AmeriKing's Registration Statement
(No. 333-04261) and incorporated herein by refer-
ence)................................................ *
2.15++ AMENDMENT NO. 1 TO PURCHASE AND SALE AGREEMENT, DATED
FEBRUARY 7, 1996, BY AND AMONG C&N DINING, INC. AND
AFFILIATES AND AMERIKING VIRGINIA CORPORATION I
(Filed as exhibit 2.15 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)........................................... *
2.16++ ASSET PURCHASE AGREEMENT, DATED FEBRUARY 7, 1996, BE-
TWEEN THIRTY-FORTY, INC. AND AMERIKING CINCINNATI
CORPORATION I (Filed as exhibit 2.16 to AmeriKing's
Registration Statement (No. 333-04261) and incorpo-
rated herein by reference)........................... *
2.17++ ASSET PURCHASE AGREEMENT, DATED FEBRUARY 7, 1996, BE-
TWEEN HOUSTON, INC. AND AMERIKING CINCINNATI CORPORA-
TION I (Filed as exhibit 2.17 to AmeriKing's Regis-
tration Statement (No. 333-04261) and incorporated
herein by reference)................................. *
2.18++ ASSET PURCHASE AGREEMENT, DATED FEBRUARY 7, 1996, BE-
TWEEN FIFTH & RACE, INC. AND AMERIKING CINCINNATI
CORPORATION I (Filed as exhibit 2.18 to AmeriKing's
Registration Statement (No. 333-04261) and incorpo-
rated herein by reference)........................... *
2.19 ASSET PURCHASE AGREEMENT among F&P ENTERPRISES, INC.,
THE SHAREHOLDERS OF F&P ENTERPRISES, INC. and NA-
TIONAL RESTAURANT ENTERPRISES, INC...................
2.20 AMENDMENT NO. 1 TO THE ASSET PURCHASE AGREEMENT among
F&P ENTERPRISES, INC., THE SHAREHOLDERS OF F&P ENTER-
PRISES, INC. and NATIONAL RESTAURANT ENTERPRISES,
INC..................................................
2.21 ASSET PURCHASE AGREEMENT among NORTH FOODS, INC., THE
SHAREHOLDERS OF NORTH FOODS, INC. and NATIONAL RES-
TAURANT ENTERPRISES, INC.............................
2.22 ASSET PURCHASE AGREEMENT among NORTH FOODS, INC., THE
SHAREHOLDERS OF NORTH FOODS, INC. and NATIONAL RES-
TAURANT ENTERPRISES, INC.............................
2.23 AMENDMENT NO. 2 TO THE ASSET PURCHASE AGREEMENT dated
June 16, 1997 among F&P ENTERPRISES, INC., THE SHARE-
HOLDERS OF F&P ENTERPRISES, INC. AND NATIONAL RESTAU-
RANT ENTERPRISES, INC. (Filed as exhibit 2.23 to
AmeriKing's Current Report on Form 8-K filed on July
14, 1997 and incorporated herein by reference)....... *
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
2.24 AMENDMENT NO. 3 TO THE ASSET PURCHASE AGREEMENT dated
June 16, 1997 among F&P ENTERPRISES, INC., THE SHARE-
HOLDERS OF F&P ENTERPRISES, INC. AND NATIONAL RESTAU-
RANT ENTERPRISES, INC. (Filed as exhibit 2.24 to
AmeriKing's Current Report on Form 8-K filed on July
14, 1997 and incorporated herein by reference)....... *
2.25 AMENDMENT NO. 2 TO THE ASSET PURCHASE AGREEMENT dated
June 16, 1997 among NORTH FOODS, INC., THE SHAREHOLD-
ERS OF NORTH FOODS, INC. AND NATIONAL RESTAURANT EN-
TERPRISES, INC. (Filed as exhibit 2.25 to AmeriKing's
Current Report on Form 8-K filed on July 14, 1997 and
incorporated herein by reference).................... *
2.26 AMENDMENT NO. 3 TO THE ASSET PURCHASE AGREEMENT dated
June 16, 1997 among NORTH FOODS, INC., THE SHAREHOLD-
ERS OF NORTH FOODS, INC. AND NATIONAL RESTAURANT EN-
TERPRISES, INC. (Filed as exhibit 2.26 to AmeriKing's
Current Report on Form 8-K filed on July 14, 1997 and
incorporated herein by reference).................... *
2.27 REAL ESTATE PURCHASE AGREEMENT dated March 7, 1997
among T&B LEASING, THOMAS FICKLING AND WILLIAM PREN-
TICE (the "PARTNERS"), AND CASTLE PROPERTIES, LLC.
(Filed as exhibit 2.27 to AmeriKing's Current Report
on Form 8-K filed on July 14, 1997 and incorporated
herein by reference)................................. *
2.28 AMENDMENT NO. 1 TO THE REAL ESTATE PURCHASE AGREEMENT
dated April 8, 1997 among T&B LEASING, THOMAS
FICKLING AND WILLIAM PRENTICE (the "PARTNERS") AND
CASTLE PROPERTIES, LLC. (Filed as exhibit 2.28 to
AmeriKing's Current Report on Form 8-K filed on July
14, 1997 and incorporated herein by reference)....... *
2.29 AMENDMENT NO. 2 TO THE REAL ESTATE PURCHASE AGREEMENT
dated June 16, 1997 among T&B LEASING, THOMAS
FICKLING AND WILLIAM PRENTICE (the "PARTNERS"), CAS-
TLE PROPERTIES, LLC AND NATIONAL RESTAURANT ENTER-
PRISES, INC. (Filed as exhibit 2.29 to AmeriKing's
Current Report on Form 8-K filed on July 14, 1997 and
incorporated herein by reference).................... *
2.30 AMENDMENT NO. 3 TO THE REAL ESTATE PURCHASE AGREEMENT
dated June 16, 1997 among T&B LEASING, THOMAS
FICKLING AND WILLIAM PRENTICE, INVESTORS TITLE EX-
CHANGE CORPORATION, AND NATIONAL RESTAURANT ENTER-
PRISES, INC. (Filed as exhibit 2.30 to AmeriKing's
Current Report on Form 8-K filed on July 14, 1997 and
incorporated herein by reference).................... *
2.31 REAL ESTATE PURCHASE AGREEMENT dated March 7, 1997
among W&W INVESTMENTS LIMITED PARTNERSHIP, THOMAS
FICKLING AND WILLIAM PRENTICE (the "GENERAL PART-
NERS"), AND CASTLE PROPERTIES, LLC. (Filed as exhibit
2.31 to AmeriKing's Current Report on Form 8-K filed
on July 14, 1997 and incorporated herein by refer-
ence)................................................ *
2.32 AMENDMENT NO. 1 TO THE REAL ESTATE PURCHASE AGREEMENT
dated April 8, 1997 among W&W INVESTMENTS LIMITED
PARTNERSHIP, THOMAS FICKLING AND WILLIAM PRENTICE
(the "PARTNERS") AND CASTLE PROPERTIES, LLC. (Filed
as exhibit 2.32 to AmeriKing's Current Report on Form
8-K filed on July 14, 1997 and incorporated herein by
reference)........................................... *
2.33 AMENDMENT NO. 2 TO THE REAL ESTATE PURCHASE AGREEMENT
dated June 16, 1997 among W&W INVESTMENT LIMITED
PARTNERSHIP, THOMAS FICKLING AND WILLIAM PRENTICE
(the "GENERAL PARTNERS"), CASTLE PROPERTIES, LLC AND
NATIONAL RESTAURANT ENTERPRISES, INC. (Filed as ex-
hibit 2.33 to AmeriKing's Current Report on Form 8-K
filed on July 14, 1997 and incorporated herein by
reference)........................................... *
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
2.34 STOCK PURCHASE AGREEMENT DATED JULY 22, 1997 among
THE SHAREHOLDERS OF B&J RESTAURANTS, INC., and NA-
TIONAL RESTAURANT ENTERPRISES, INC...................
3.1 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
AMERIKING (Filed as exhibit 3.1 to AmeriKing's Regis-
tration Statement (No. 333-04261) and incorporated
herein by reference)................................. *
3.2 AMENDED AND RESTATED BYLAWS OF AMERIKING (Filed as
exhibit 3.2 to AmeriKing's Registration Statement
(No. 333-04261) and incorporated herein by reference) *
4.1 STOCKHOLDERS AGREEMENT, DATED SEPTEMBER 1, 1994, BY
AND AMONG AMERIKING AND THE STOCKHOLDERS APPEARING ON
THE SIGNATURE PAGES THERETO (Filed as exhibit 4.1 to
AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................ *
4.2 CONSENT AND AMENDMENT NO. 1 TO STOCKHOLDERS AGREE-
MENT, DATED NOVEMBER 30, 1994, BY AND AMONG AMERIKING
AND THE STOCKHOLDERS APPEARING ON THE SIGNATURE PAGES
THERETO (Filed as exhibit 4.2 to AmeriKing's Regis-
tration Statement (No. 333-04261) and incorporated
herein by reference)................................. *
4.3 CONSENT AND AMENDMENT NO. 2 TO STOCKHOLDERS AGREE-
MENT, DATED FEBRUARY 7, 1996, BY AND AMONG AMERIKING
AND THE STOCKHOLDERS APPEARING ON THE SIGNATURE PAGES
THERETO (Filed as exhibit 4.3 to AmeriKing's Regis-
tration Statement (No. 333-04261) and incorporated
herein by reference)................................. *
4.4 AMENDED AND RESTATED STOCKHOLDERS AGREEMENT BY AND
AMONG AMERIKING AND THE STOCKHOLDERS APPEARING ON THE
SIGNATURE PAGES THERETO (Filed as exhibit 4.4 to
AmeriKing's Form 10-K for the year ended December 30,
1996 and incorporated herein by reference)........... *
4.5 MANAGEMENT SUBSCRIPTION AGREEMENT, DATED SEPTEMBER 1,
1994, BY AND AMONG AMERIKING, TABOR RESTAURANT ASSO-
CIATES, INC., JARO ENTERPRISES, INC., JARO RESTAU-
RANTS, INC., JB RESTAURANTS, INC., CASTLEKING, INC.,
WHITE-OSBORN RESTAURANTS, INC., OSBURGER, INC., LAW-
RENCE JARO, WILLIAM OSBORN, GARY HUBERT, JOEL AASEBY,
DONALD STAHURSKI AND SCOTT VASATKA (Filed as exhibit
4.5 to AmeriKing's Registration Statement (No. 333-
04261) and incorporated herein by reference)......... *
4.6 STOCK OPTION AGREEMENT, DATED SEPTEMBER 1, 1994, BE-
TWEEN AMERIKING AND SCOTT VASATKA (Filed as exhibit
4.6 to AmeriKing's Registration Statement (No. 333-
04261) and incorporated herein by reference)......... *
4.7 STOCK OPTION AGREEMENT, DATED SEPTEMBER 1, 1994, BE-
TWEEN AMERIKING AND DONALD STAHURSKI (Filed as ex-
hibit 4.7 to AmeriKing's Registration Statement (No.
333-04261) and incorporated herein by reference)..... *
4.8 WARRANT AGREEMENT, DATED SEPTEMBER 1, 1994, BETWEEN
AMERIKING AND THE FIRST NATIONAL BANK OF BOSTON
(Filed as exhibit 4.8 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)........................................... *
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
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4.9 COMMON STOCK PURCHASE WARRANT, DATED SEPTEMBER 1,
1994, BETWEEN AMERIKING AND BANCBOSTON INVESTMENTS
INC. (Filed as exhibit 4.9 to AmeriKing's Registra-
tion Statement (No. 333-04261) and incorporated
herein by reference)................................. *
4.10 FIRST AMENDMENT TO COMMON STOCK PURCHASE WARRANT,
DATED NOVEMBER 30, 1994 (Filed as exhibit 4.10 to
AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................ *
4.11 SECOND AMENDMENT TO COMMON STOCK PURCHASE WARRANT,
DATED FEBRUARY 7, 1996 (Filed as exhibit 4.11 to
AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................ *
4.12 AMENDED AND RESTATED NOTE, DATED FEBRUARY 7, 1996,
FROM AMERIKING TO MCIT PLC IN THE AGGREGATE PRINCIPAL
AMOUNT OF $11,000,000 (Filed as exhibit 4.12 to
AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................ *
4.13 AMENDED AND RESTATED DEFERRED LIMITED INTEREST GUAR-
ANTY, DATED FEBRUARY 7, 1996, FROM ENTERPRISES TO
MCIT PLC (Filed as exhibit 4.13 to AmeriKing's Regis-
tration Statement (No. 333-04261) and incorporated
herein by reference)................................. *
4.14 AMENDED AND RESTATED NOTE, DATED FEBRUARY 7, 1996,
FROM AMERIKING TO JARO ENTERPRISES, INC. IN THE AG-
GREGATE PRINCIPAL AMOUNT OF $1,224,000 (Filed as ex-
hibit 4.14 to AmeriKing's Registration Statement (No.
333-04261) and incorporated herein by reference)..... *
4.15 AMENDED AND RESTATED NOTE, DATED FEBRUARY 7, 1996,
FROM AMERIKING TO JARO RESTAURANTS, INC. IN THE AG-
GREGATE PRINCIPAL AMOUNT OF $112,000 (Filed as ex-
hibit 4.15 to AmeriKing's Registration Statement (No.
333-04261 ) and incorporated herein by reference).... *
4.16 AMENDED AND RESTATED NOTE, DATED FEBRUARY 7, 1996,
FROM AMERIKING TO JB RESTAURANTS, INC. IN THE AGGRE-
GATE PRINCIPAL AMOUNT OF $2,019,000 (Filed as exhibit
4.16 to AmeriKing's Registration Statement (No. 333-
04261) and incorporated herein by reference)......... *
4.17 AMENDED AND RESTATED NOTE, DATED FEBRUARY 7, 1996,
FROM AMERIKING TO CASTLEKING, INC. IN THE AGGREGATE
PRINCIPAL AMOUNT OF $385,769 (Filed as exhibit 4.17
to AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................ *
4.18 AMENDED AND RESTATED NOTE, DATED FEBRUARY 7, 1996,
FROM AMERIKING TO WHITE-OSBORN RESTAURANTS, INC. IN
THE AGGREGATE PRINCIPAL AMOUNT OF $659,231 (Filed as
exhibit 4.18 to AmeriKing's Registration Statement
(No. 333-04261 ) and incorporated herein by refer-
ence)................................................ *
4.19 SECURITIES PURCHASE AGREEMENT, DATED NOVEMBER 30,
1994, BETWEEN AMERIKING AND BANCBOSTON INVESTMENTS,
INC. (Filed as exhibit 4.19 to AmeriKing's Registra-
tion Statement (No. 333-04261) and incorporated
herein by reference)................................. *
4.20 COMMON STOCK PURCHASE WARRANT, DATED NOVEMBER 30,
1994, BETWEEN AMERIKING AND BANCBOSTON INVESTMENTS,
INC. (Filed as exhibit 4.20 to AmeriKing's Registra-
tion Statement (No. 333-04261) and incorporated
herein by reference)................................. *
</TABLE>
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4.21 JUNIOR SUBORDINATED NOTE, DATED NOVEMBER 30, 1994,
FROM AMERIKING TO BANCBOSTON INVESTMENTS, INC. IN THE
AGGREGATE PRINCIPAL AMOUNT OF $600,000 (Filed as ex-
hibit 4.21 to AmeriKing's Registration Statement (No.
333-04261) and incorporated herein by reference)..... *
4.22 SECURED PROMISSORY NOTE, DATED NOVEMBER 21, 1995,
FROM AMERIKING TENNESSEE CORPORATION I TO BKC IN THE
AGGREGATE PRINCIPAL AMOUNT OF $6,920,700 (Filed as
exhibit 4.22 to AmeriKing's Registration Statement
(No. 333-04261) and incorporated herein by refer-
ence)................................................ *
4.23 AMENDMENT TO SECURED PROMISSORY NOTE, DATED MAY 21,
1996, FROM AMERIKING TENNESSEE CORPORATION I TO BKC
IN THE AGGREGATE PRINCIPAL AMOUNT OF $6,093,067
(Filed as exhibit 4.23 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)........................................... *
4.24 GUARANTY, DATED NOVEMBER 21, 1995, FROM LAWRENCE JARO
AND WILLIAM OSBORN TO BKC (Filed as exhibit 4.24 to
AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................ *
4.25 RATIFICATION OF GUARANTY, MAY 21, 1996, FROM LAWRENCE
JARO AND WILLIAM OSBORN TO BKC (Filed as exhibit 4.25
to AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................ *
4.26 PROMISSORY NOTE, DATED NOVEMBER 29, 1995, FROM
AMERIKING COLORADO CORPORATION I TO FRANCHISE ACCEPT-
ANCE CORPORATION LIMITED IN THE AGGREGATE PRINCIPAL
AMOUNT OF $1,865,000 (Filed as exhibit 4.26 to
AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................ *
4.27 AMENDMENT TO PROMISSORY NOTE, DATED DECEMBER 14,
1995, FROM AMERIKING COLORADO CORPORATION I TO FRAN-
CHISE ACCEPTANCE CORPORATION LIMITED (Filed as ex-
hibit 4.27 to AmeriKing's Registration Statement (No.
333-04261) and incorporated herein by reference)..... *
4.28 COMMON STOCK PURCHASE WARRANT, DATED FEBRUARY 7,
1996, FROM AMERIKING TO PMI MEZZANINE FUND, L.P.
(Filed as exhibit 4.28 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)........................................... *
4.29 SENIOR SUBORDINATED NOTE, DATED FEBRUARY 7, 1996,
FROM ENTERPRISES TO PMI MEZZANINE FUND, L.P. IN THE
AGGREGATE PRINCIPAL AMOUNT OF $15,000,000. (Filed as
exhibit 4.29 to AmeriKing's Registration Statement
(No. 333-04261) and incorporated herein by refer-
ence)................................................ *
4.30 SUBORDINATED GUARANTY, DATED FEBRUARY 7, 1996, FROM
AMERIKING VIRGINIA CORPORATION I AND AMERIKING CIN-
CINNATI CORPORATION I TO PMI MEZZANINE FUND, L.P.
(Filed as exhibit 4.30 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)........................................... *
4.31 SECOND AMENDED AND RESTATED REVOLVING CREDIT NOTE,
DATED FEBRUARY 7, 1996, FROM ENTERPRISES TO THE FIRST
NATIONAL BANK OF BOSTON, THE OTHER LENDING INSTITU-
TIONS LISTED ON SCHEDULE 1 THERETO, AND THE FIRST NA-
TIONAL BANK OF BOSTON, AS AGENT (Filed as exhibit
4.31 to AmeriKing's Registration Statement (No. 333-
04261) and incorporated herein by reference)......... *
</TABLE>
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4.32 SECOND AMENDED AND RESTATED TERM LOAN A NOTE, DATED
FEBRUARY 7, 1996, FROM ENTERPRISES TO THE FIRST NA-
TIONAL BANK OF BOSTON, THE OTHER LENDING INSTITUTIONS
LISTED ON SCHEDULE 1 THERETO, AND THE FIRST NATIONAL
BANK OF BOSTON, AS AGENT (Filed as exhibit 4.32 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)..................... *
4.33 SECOND AMENDED AND RESTATED TERM LOAN B NOTE, DATED
FEBRUARY 7, 1996, FROM ENTERPRISES TO THE FIRST NA-
TIONAL BANK OF BOSTON, THE OTHER LENDING INSTITUTIONS
LISTED ON SCHEDULE 1 THERETO, AND THE FIRST NATIONAL
BANK OF BOSTON, AS AGENT (Filed as exhibit 4.33 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)..................... *
4.34 LIMITED GUARANTY, DATED SEPTEMBER 1, 1994, FROM
AMERIKING TO THE FIRST NATIONAL BANK OF BOSTON, THE
OTHER LENDING INSTITUTIONS LISTED ON SCHEDULE 1 THERE-
TO, AND THE FIRST NATIONAL BANK OF BOSTON, AS AGENT
(Filed as exhibit 4.34 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)............................................ *
4.35 GUARANTY, DATED FEBRUARY 7, 1996, FROM AMERIKING VIR-
GINIA CORPORATION I AND AMERIKING CINCINNATI CORPORA-
TION I TO THE FIRST NATIONAL BANK OF BOSTON, THE OTHER
LENDING INSTITUTIONS LISTED ON SCHEDULE 1 THERETO, AND
THE FIRST NATIONAL BANK OF BOSTON, AS AGENT (Filed as
exhibit 4.35 to AmeriKing's Registration Statement
(No. 333-04261) and incorporated herein by reference). *
4.36 UNCONDITIONAL GUARANTY OF PAYMENT AND PERFORMANCE,
DATED FEBRUARY 7, 1996, FROM ENTERPRISES TO FFCA AC-
QUISITION CORPORATION (Filed as exhibit 4.36 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)..................... *
4.37 FORM OF AMENDMENT NO. 1 TO COMMON STOCK PURCHASE WAR-
RANT FROM AMERIKING TO PMI MEZZANINE FUND, L.P........ *
4.38 INDENTURE BETWEEN AMERIKING AND TRUSTEE WITH RESPECT
TO SENIOR NOTES (Filed as exhibit 4.38 to AmeriKing's
Registration Statement (No. 333-04261) and incorpo-
rated herein by reference)............................ *
4.39 FORM OF SENIOR NOTES (ATTACHED TO EXHIBIT 4.38).......
4.40 INDENTURE BETWEEN AMERIKING AND TRUSTEE WITH RESPECT
TO EXCHANGE DEBENTURES (Filed as exhibit 4.40 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)..................... *
4.41 INTENTIONALLY OMITTED.................................
4.42 FORM OF EXCHANGE DEBENTURES (ATTACHED TO EXHIBIT
4.40).................................................
4.43 PROMISSORY NOTE, DATED JULY 18, 1996, FROM AMERIKING
TENNESSEE CORPORATION I TO FRANCHISE ACCEPTANCE CORPO-
RATION LIMITED IN THE AGGREGATE PRINCIPAL AMOUNT OF
$6,100,000 (Filed as exhibit 4.43 to AmeriKing's Reg-
istration Statement (No. 333-04261) and incorporated
herein by reference).................................. *
4.44 CERTIFICATE OF DESIGNATION RELATING TO THE SENIOR PRE-
FERRED STOCK (Filed as exhibit 4.44 to AmeriKing's
Registration Statement (No. 333-04261) and incorpo-
rated herein by reference)............................ *
</TABLE>
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4.45 PROMISSORY NOTE, DATED JULY 18, 1996, FROM AMERIKING
TENNESSEE CORPORATION I TO FRANCHISE ACCEPTANCE COR-
PORATION LIMITED IN THE AGGREGATE PRINCIPAL AMOUNT OF
$900,000 (Filed as exhibit 4.45 to AmeriKing's Regis-
tration Statement (No. 333-04261) and incorporated
herein by reference)................................. *
4.46 AMENDMENT NO. 1 TO STOCK OPTION AGREEMENT BY AND
AMONG AMERIKING, SCOTT VASATKA AND DONALD STAHURSKI
(Filed as exhibit 4.46 to AmeriKing's Form 10-K for
the year ended December 30, 1996 and incorporated
herein by reference)................................. *
4.47 AMENDMENT NO. 1 TO MANAGEMENT SUBSCRIPTION AGREEMENT
(Filed as exhibit 4.47 to AmeriKing's Form 10-K for
the year ended December 30, 1996 and incorporated
herein by reference)................................. *
9.1 JARO PROXY AGREEMENT, DATED SEPTEMBER 1, 1994, BY AND
AMONG LAWRENCE JARO, TABOR RESTAURANT ASSOCIATES,
INC., JARO ENTERPRISES, INC., JARO RESTAURANTS, INC.
AND JB RESTAURANTS, INC. (Filed as exhibit 9.1 to
AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................ *
9.2 OSBORN PROXY AGREEMENT, DATED SEPTEMBER 1, 1994, BY
AND AMONG WILLIAM OSBORN, CASTLEKING, INC., OSBURGER,
INC. AND WHITE-OSBORN, INC. (Filed as exhibit 9.2 to
AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................ *
10.1 SECOND AMENDED AND RESTATED REVOLVING CREDIT AND TERM
LOAN AGREEMENT, DATED FEBRUARY 7, 1996, BY AND AMONG
AMERIKING, ENTERPRISES, THE FIRST NATIONAL BANK OF
BOSTON, THE OTHER LENDING INSTITUTIONS LISTED ON
SCHEDULE 1 THERETO, AND THE FIRST NATIONAL BANK OF
BOSTON, AS AGENT (Filed as exhibit 10.1 to
AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................ *
10.2 SECURITY AGREEMENT, DATED SEPTEMBER 1, 1994, BY AND
AMONG ENTERPRISES AND THE FIRST NATIONAL BANK OF BOS-
TON, THE OTHER LENDING INSTITUTIONS LISTED ON SCHED-
ULE 1 THERETO, AND THE FIRST NATIONAL BANK OF BOSTON,
AS AGENT (Filed as exhibit 10.2 to AmeriKing's Regis-
tration Statement (No. 333-04261) and incorporated
herein by reference)................................. *
10.3 AMENDMENT TO SECURITY AGREEMENT, DATED FEBRUARY 7,
1996, BY AND AMONG ENTERPRISES AND THE FIRST NATIONAL
BANK OF BOSTON, THE OTHER LENDING INSTITUTIONS LISTED
ON SCHEDULE 1 THERETO, AND THE FIRST NATIONAL BANK OF
BOSTON, AS AGENT (Filed as exhibit 10.3 to
AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................ *
10.4 STOCK PLEDGE AGREEMENT, DATED SEPTEMBER 1, 1994, BY
AND AMONG AMERIKING AND THE FIRST NATIONAL BANK OF
BOSTON, THE OTHER LENDING INSTITUTIONS LISTED ON
SCHEDULE 1 THERETO, AND THE FIRST NATIONAL BANK OF
BOSTON, AS AGENT (Filed as exhibit 10.4 to
AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................ *
10.5 AMENDMENT TO STOCK PLEDGE AGREEMENT, DATED FEBRUARY
7, 1996, BY AND AMONG AMERIKING AND THE FIRST NA-
TIONAL BANK OF BOSTON, THE OTHER LENDING INSTITUTIONS
LISTED ON SCHEDULE 1 THERETO, AND THE FIRST NATIONAL
BANK OF BOSTON AS AGENT (Filed as exhibit 10.5 to
AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................ *
</TABLE>
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10.6 SECURITY AGREEMENT, DATED FEBRUARY 7, 1996, BY AND
AMONG AMERIKING VIRGINIA CORPORATION I, AMERIKING
CINCINNATI CORPORATION I AND THE FIRST NATIONAL BANK
OF BOSTON (Filed as exhibit 10.6 to AmeriKing's Reg-
istration Statement (No. 333-04261) and incorporated
herein by reference)................................. *
10.7 STOCK PLEDGE AGREEMENT, DATED FEBRUARY 7, 1996, BY
AND AMONG ENTERPRISES, AMERIKING VIRGINIA CORPORATION
I, AMERIKING CINCINNATI CORPORATION I AND THE FIRST
NATIONAL BANK OF BOSTON (Filed as exhibit 10.7 to
AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................ *
10.8 AMENDED AND RESTATED PURCHASE AGREEMENT, DATED FEBRU-
ARY 7, 1996, BETWEEN AMERIKING AND MCIT PLC (Filed as
exhibit 10.8 to AmeriKing's Registration Statement
(No. 333-04261) and incorporated herein by refer-
ence)................................................ *
10.9 PLEDGE AGREEMENT, DATED SEPTEMBER 1, 1994, BETWEEN
AMERIKING AND MCIT PLC (Filed as exhibit 10.9 to
AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................ *
10.10 SUBORDINATION AGREEMENT, DATED SEPTEMBER 1, 1994, BY
AND AMONG BKC, MCIT PLC AND AMERIKING (Filed as ex-
hibit 10.10 to AmeriKing's Registration Statement
(No. 333-04261) and incorporated herein by refer-
ence)................................................ *
10.11 AMENDMENT AND CONSENT NO. 1 TO SECURITIES PURCHASE
AGREEMENT, DATED FEBRUARY 7, 1996, BETWEEN AMERIKING
AND BANCBOSTON INVESTMENTS, INC. (Filed as exhibit
10.11 to AmeriKing's Registration Statement (No. 333-
04261) and incorporated herein by reference)......... *
10.12 INTERCREDITOR AGREEMENT, DATED FEBRUARY 7, 1996, BY
AND AMONG BKC, AMERIKING VIRGINIA CORPORATION I,
AMERIKING CINCINNATI CORPORATION I, LAWRENCE JARO,
WILLIAM OSBORN, GARY HUBERT, ENTERPRISES, AMERIKING
AND THE FIRST NATIONAL BANK OF BOSTON (Filed as ex-
hibit 10.12 to AmeriKing's Registration Statement
(No. 333-04261) and incorporated herein by refer-
ence)................................................ *
10.13 STOCK PLEDGE AGREEMENT, DATED NOVEMBER 21, 1995, BE-
TWEEN ENTERPRISES AND BKC (Filed as exhibit 10.13 to
AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................ *
10.14 RATIFICATION OF STOCK PLEDGE AGREEMENT, DATED MAY 21,
1996, BETWEEN ENTERPRISES AND BKC (Filed as exhibit
10.14 to AmeriKing's Registration Statement (No. 333-
04261) and incorporated herein by reference)......... *
10.15 STOCK PLEDGE AGREEMENT, DATED NOVEMBER 21, 1995, BE-
TWEEN ENTERPRISES AND THE FIRST NATIONAL BANK OF BOS-
TON, THE OTHER LENDING INSTITUTIONS LISTED ON SCHED-
ULE 1 THERETO, AND THE FIRST NATIONAL BANK OF BOSTON,
AS AGENT (Filed as exhibit 10.15 to AmeriKing's Reg-
istration Statement (No. 333-04261) and incorporated
herein by reference)................................. *
10.16 NOTE PURCHASE AGREEMENT, DATED FEBRUARY 7, 1996, BY
AND AMONG AMERIKING, ENTERPRISES AND PMI MEZZANINE
FUND, L.P. (Filed as exhibit 10.16 to AmeriKing's
Registration Statement (No. 333-04261) and incorpo-
rated herein by reference)........................... *
10.17 FORM OF AMENDMENT NO. 1 TO NOTE PURCHASE AGREEMENT,
BY AND AMONG AMERIKING, ENTERPRISES AND PMI MEZZANINE
FUND, L.P............................................ *
</TABLE>
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10.18 SUBORDINATION AGREEMENT, DATED FEBRUARY 7, 1996, BY
AND AMONG AMERIKING, ENTERPRISES, AMERIKING VIRGINIA
CORPORATION I, AMERIKING CINCINNATI CORPORATION I,
AMERIKING TENNESSEE CORPORATION I, AMERIKING COLORADO
CORPORATION I, LAWRENCE JARO, WILLIAM OSBORN, GARY
HUBERT AND BKC (Filed as exhibit 10.18 to AmeriKing's
Registration Statement (No. 333-04261) and incorpo-
rated herein by reference)........................... *
10.19 SALE-LEASEBACK AGREEMENT, DATED FEBRUARY 7, 1996, BY
AND AMONG AMERIKING VIRGINIA CORPORATION I, AMERIKING
TENNESSEE CORPORATION I AND FFCA ACQUISITION CORPORA-
TION (Filed as exhibit 10.19 to AmeriKing's Registra-
tion Statement (No. 333-04261) and incorporated
herein by reference)................................. *
10.20 LEASE, DATED FEBRUARY 7, 1996, BY AND AMONG AMERIKING
VIRGINIA CORPORATION I, AMERIKING TENNESSEE CORPORA-
TION I AND FFCA ACQUISITION CORPORATION (Filed as ex-
hibit 10.20 to AmeriKing's Registration Statement
(No. 333-04261) and incorporated herein by refer-
ence)................................................ *
10.21 FORM OF FRANCHISE AGREEMENT BETWEEN BKC AND FRANCHI-
SEE (Filed as exhibit 10.21 to AmeriKing's Registra-
tion Statement (No. 333-04261) and incorporated
herein by reference)................................. *
10.22 SCHEDULE OF AMERIKING FRANCHISE AGREEMENTS (Filed as
exhibit 10.22 to AmeriKing's Registration Statement
(No. 333-04261) and incorporated herein by refer-
ence)................................................ *
10.23 FORM OF LEASE AGREEMENT BETWEEN BKC AND LESSEE (Filed
as exhibit 10.23 to AmeriKing's Registration State-
ment (No. 333-04261) and incorporated herein by ref-
erence).............................................. *
10.24 SCHEDULE OF AMERIKING LEASE AGREEMENTS (Filed as ex-
hibit 10.24 to AmeriKing's Registration Statement
(No. 333-04261) and incorporated herein by refer-
ence)................................................ *
10.25 FORM OF GUARANTEE, INDEMNIFICATION AND ACKNOWLEDGMENT
OF BKC FRANCHISE AGREEMENT (Filed as exhibit 10.25 to
AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................ *
10.26 FORM OF GUARANTEE, INDEMNIFICATION AND ACKNOWLEDGMENT
OF BKC LEASE AGREEMENT (Filed as exhibit 10.26 to
AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................ *
10.27 CAPITAL EXPENDITURE AGREEMENT, DATED SEPTEMBER 1,
1994, BY AND AMONG AMERIKING, ENTERPRISES AND BKC
(Filed as exhibit 10.27 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)........................................... *
10.28 CAPITAL EXPENDITURE AGREEMENT, DATED NOVEMBER 21,
1995, BY AND AMONG ENTERPRISES, AMERIKING TENNESSEE
CORPORATION I AND BKC (Filed as exhibit 10.28 to
AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................ *
10.29 LETTER AGREEMENT, DATED FEBRUARY 7, 1996, BETWEEN EN-
TERPRISES AND BKC (Filed as exhibit 10.29 to
AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................ *
</TABLE>
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10.30 NAPARLO DEVELOPMENT AGREEMENT, DATED FEBRUARY 7,
1996, BETWEEN AMERIKING VIRGINIA CORPORATION I AND
JOSEPH J. NAPARLO (Filed as exhibit 10.30 to
AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................ *
10.31 MANAGEMENT CONSULTING AGREEMENT, DATED SEPTEMBER 1,
1994, BY AND AMONG TJC MANAGEMENT CORPORATION,
AMERIKING AND ENTERPRISES (Filed as exhibit 10.31 to
AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................ *
10.32 INTENTIONALLY OMITTED................................ *
10.33 INTERCOMPANY MANAGEMENT CONSULTING AGREEMENT, DATED
SEPTEMBER 1, 1994 BETWEEN ENTERPRISES AND AMERIKING
(Filed as exhibit 10.33 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)........................................... *
10.34 AMENDED AND RESTATED TAX SHARING AGREEMENT, DATED
FEBRUARY 7, 1996, BETWEEN ENTERPRISES AND AMERIKING
(Filed as exhibit 10.34 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)........................................... *
10.35 EMPLOYMENT AND NON-INTERFERENCE AGREEMENT, DATED SEP-
TEMBER 1, 1994, BETWEEN LAWRENCE JARO AND ENTERPRISES
(Filed as exhibit 10.35 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)........................................... *
10.36 EMPLOYMENT AND NON-INTERFERENCE AGREEMENT, DATED SEP-
TEMBER 1, 1994, BETWEEN WILLIAM OSBORN AND ENTER-
PRISES (Filed as exhibit 10.36 to AmeriKing's Regis-
tration Statement (No. 333-04261) and incorporated
herein by reference.................................. *
10.37 EMPLOYMENT AND NON-INTERFERENCE AGREEMENT, DATED SEP-
TEMBER 1, 1994, BETWEEN GARY HUBERT AND ENTERPRISES
(Filed as exhibit 10.37 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)........................................... *
10.38 EMPLOYMENT AND NON-INTERFERENCE AGREEMENT, DATED SEP-
TEMBER 1, 1994, BETWEEN JOEL AASEBY AND ENTERPRISES
(Filed as exhibit 10.38 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)........................................... *
10.39 EMPLOYMENT AND NON-INTERFERENCE AGREEMENT, DATED SEP-
TEMBER 1, 1994, BETWEEN SCOTT VASATKA AND ENTERPRISES
(Filed as exhibit 10.39 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)........................................... *
10.40 INTENTIONALLY OMITTED................................
10.42 INTENTIONALLY OMITTED................................
10.43 INTENTIONALLY OMITTED................................
10.44 LEASE AGREEMENT FOR WESTCHESTER, ILLINOIS HEADQUAR-
TERS (Filed as exhibit 10.44 to AmeriKing's Registra-
tion Statement (No. 333-04261) and incorporated
herein by reference)................................. *
10.45 LOAN AND SECURITY AGREEMENT, DATED NOVEMBER 29, 1995,
BETWEEN AMERIKING COLORADO CORPORATION I AND FRAN-
CHISE ACCEPTANCE CORPORATION LIMITED (Filed as ex-
hibit 10.45 to AmeriKing's Registration Statement
(No. 333-04261) and incorporated herein by refer-
ence)................................................ *
</TABLE>
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<TABLE>
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10.46 LOAN AND SECURITY AGREEMENT, DATED JULY 21, 1996, BETWEEN
AMERIKING TENNESSEE CORPORATION I AND FRANCHISE ACCEPTANCE
CORPORATION LIMITED (Filed as exhibit 10.46 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated herein
by reference) *
10.47 FORM OF INTERCREDITOR AGREEMENT BY AND AMONG BKC, AMERIKING,
AND THE TRUSTEE AS REPRESENTATIVE OF THE HOLDERS OF SENIOR
NOTES UNDER THE INDENTURE (ATTACHED TO EXHIBIT 4.38) *
10.48 RESTATED EMPLOYMENT AND NON-INTERFERENCE AGREEMENT BETWEEN
WILLIAM OSBORN AND ENTERPRISES (Filed as exhibit 10.48 to
AmeriKing's Form 10-K for the year ended December 30, 1996 and
incorporated herein by reference) *
10.49 RECAPITALIZATION AGREEMENT AMONG AMERIKING AND THE STOCKHOLD-
ERS APPEARING ON THE SIGNATURE PAGES THERETO (Filed as exhibit
10.49 to AmeriKing's Form 10-K for the year ended December 30,
1996 and incorporated herein by reference *
10.50 MEMORANDUM OF UNDERSTANDING BETWEEN BKC AND THE COMPANY (Filed
as exhibit 10.50 to AmeriKing's Registration Statement (No.
333-04261) and incorporated herein by reference) *
10.51 AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING CREDIT AND
LOAN AGREEMENT, DATED MAY 14, 1996, BY AND AMONG AMERIKING,
ENTERPRISES, THE FIRST NATIONAL BANK OF BOSTON, THE OTHER
LENDING INSTITUTIONS LISTED ON SCHEDULE I THERETO AND THE
FIRST NATIONAL BANK OF BOSTON, AS AGENT (Filed as exhibit
10.51 to AmeriKing's Form 10-K for the year ended December 30,
1996 and incorporated herein by reference) *
10.52 ASSIGNMENT AND ACCEPTANCE DATED MAY 14, 1996, BY AND AMONG
AMERIKING, ENTERPRISES, THE FIRST NATIONAL BANK OF BOSTON AND
THE OTHER LENDING INSTITUTIONS, LISTED THERETO AND THE FIRST
NATIONAL BANK OF BOSTON, AS AGENT (Filed as exhibit 10.52 to
AmeriKing's Form 10-K for the year ended December 30, 1996 and
incorporated herein by reference) *
10.53 FORM OF OPERATING AGREEMENT BY AND AMONG BKC, AMERIKING ENTER-
PRISES, AMERIKING COLORADO CORPORATION I, AMERIKING ILLINOIS
CORPORATION I, AMERIKING TENNESSEE CORPORATION I, AMERIKING
VIRGINIA CORPORATION I AND AMERIKING CINCINNATI CORPORATION I
(Filed as exhibit 10.53 to AmeriKing's Form 10-K for the year
ended December 30, 1996 and incorporated herein by reference) *
10.54 THIRD AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT dated as
of June 17, 1997 among NATIONAL RESTAURANT ENTERPRISES, INC.,
AMERIKING INC. and BANKBOSTON, N.A.
11++++ STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
12++++ STATEMENTS RE: COMPUTATION OF RATIOS
21 SUBSIDIARIES OF AMERIKING (Filed as exhibit 10.21 to
AmeriKing's Registration Statement (No. 333-04261) and incor-
porated herein by reference) *
23.1 CONSENT OF MAYER, BROWN & PLATT (Filed as exhibit 23.1 to
AmeriKing's Registration Statement (No. 333-04261) and incor-
porated herein by reference) *
23.2 CONSENT OF DELOITTE & TOUCHE (Filed as exhibit 23.2 to
AmeriKing's Registration Statement (No. 333-04261) and incor-
porated herein by reference) *
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
24 POWER OF ATTORNEY
25 T-1 FOR EXCHANGE DEBENTURE INDENTURE *
26 T-1 FOR SENIOR NOTE INDENTURE *
27++++ FINANCIAL DATA SCHEDULE
</TABLE>
- --------
* Previously filed.
++ The schedules and exhibits to these agreements have not been filed pursuant
to Item 601(b)(2) of Regulation S-K. Such schedules and exhibits will be
filed supplementally upon the request of the Securities and Exchange
Commission.
++++Superseding exhibit.
<PAGE>
Exhibit 2.34
STOCK PURCHASE AGREEMENT
among
THE SHAREHOLDERS OF B & J RESTAURANTS, INC.,
B & J RESTAURANTS, INC.,
and
NATIONAL RESTAURANT ENTERPRISES, INC.
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into
this ____ day of July, 1997, among JAMES E. GREEN AND ROBERT D. GREEN (each a
"Shareholder" and collectively, the "Shareholders"), B & J RESTAURANTS, INC., a
North Carolina corporation (the "Company"), and NATIONAL RESTAURANT
ENTERPRISES, INC. d/b/a AMERIKING CORPORATION, a Delaware corporation
("Purchaser").
R E C I T A L S:
WHEREAS, the Company currently operates twenty-seven (27) Burger King
restaurants (the "Operational Restaurants") and will open for business three (3)
additional Burger King restaurants (the "Development Restaurants") prior to the
Closing Date (the "Business") whose locations are listed on Exhibit 1
(hereinafter, the Operational Restaurants and the Development Restaurants are
collectively referred to as the "Restaurants");
WHEREAS, James E. Green owns of record and beneficially 839 shares of the
Common Stock, par value $1.00 per share (the "Common Stock"), of the Company,
and Robert D. Green owns of record and beneficially 839 shares of the Common
Stock, and such shares owned by the Shareholders (the "Shares") constitute all
of the outstanding shares of the capital stock of the Company;
WHEREAS, the Shareholders desire to sell, assign, transfer and convey to
Purchaser, and Purchaser desires to purchase from the Shareholders, the Shares
on the terms and subject to the conditions hereinafter contained; and
WHEREAS, Purchaser and the Shareholders desire to enter into certain
agreements among them on the terms and subject to the conditions hereinafter
contained.
NOW THEREFORE, in consideration of the Recitals that shall be deemed to be
a substantive part of this Agreement and the mutual covenants, promises,
agreements, representations and warranties contained in this Agreement, the
parties hereto do hereby covenant, promise, agree, represent and warrant as
follows:
AGREEMENT
ARTICLE I -- PURCHASE AND SALE OF SHARES
1.1 Transfer and Sale of the Shares. On the terms and subject to the
conditions hereinafter set forth, each of the Shareholders agrees, at the
Closing (as hereinafter defined), to convey, transfer and deliver, and Purchaser
agrees to purchase and pay for at the Closing, the Shares owned by such
Shareholder. The certificates for the Shares to be conveyed, transferred and
delivered to Purchaser shall be physically present at the Closing, duly endorsed
in blank and otherwise in a form reasonably acceptable to Purchaser. At the
Closing, the Shares, and the certificates representing them, shall be free and
clear of any liens, mortgages, security interests, encumbrances or charges of
any kind.
<PAGE>
1.2 Company's Assets. At the Closing, and except as listed on Exhibit 1.2
(such assets listed on Exhibit 1.2 being referred to as the "Excluded Assets"),
the Company shall own all of the right, title and interest in and to the
following assets (all of which assets of the Company are hereinafter
collectively referred to as the "Assets"):
1.2.1 All of the Company's equipment, furniture, materials and
supplies, used in the Business and owned by the Company including, but not
limited to, all of the equipment, furniture, materials and supplies described in
Exhibit 1.2.1 (the "Equipment").
1.2.2 All of the Company's fixed assets, including, but not limited
to, all of the fixed assets used in the Business and owned by the Company
described in Exhibit 1.2.2 (the "Fixed Assets").
1.2.3 All of the Company's saleable, usable and merchantable
Inventory (as hereinafter defined) located at the Restaurants.
1.2.4 All of the Company's rights under the Company's Burger King
Franchise Agreements between the Company and Burger King Corporation, which are
listed on Exhibit 1.2.4, and copies of which are attached thereto (the
"Franchise Agreements").
1.2.5 All of the Company's leasehold and tenant improvements
(excluding fixtures that have become part of the real property to which they are
attached).
1.2.6 All of the Company's customer lists and customer sales files
("Customer Lists").
1.2.7 All of the Company's leasehold interest in the real property
leases regarding eight of the Restaurants owned and operated by the Company as
listed on and attached to Exhibit 1.2.7 (a) (the "Nonaffiliate Real Property
Leases"). The Company and the Shareholders agree to cause James E. Green, Debra
F. Green, Robert D. Green and Pamela W. Green, the landlords for the remaining
twenty-two (22) of the real property leases (the "Affiliate Real Property
Leases") regarding the Restaurants, to consent to the terminations as of the
Closing Date of the existing Affiliate Real Property Leases and to execute new
real property leases (the "New Affiliate Real Property Leases") in the form of
the real property lease attached hereto as Exhibit 1.2.7 (b), with base rents
for the initial terms of each such lease as set forth in Exhibit 1.2.7(c). The
New Affiliate Real Property Leases shall provide for rights of first refusal
with the Purchaser to acquire the real property subject to said leases if the
landlord thereof desires to sell said real property. At the Closing, the Company
shall deliver to the Purchaser and the Company the consent of the landlords to
the Nonaffiliate Real Property Leases to the transfer of the Shares by the
Shareholders to the Purchaser, if required under such lease, in substantially
the form of Exhibit 1.2.7(d) (the "Consents to Transfer"), and a certificate
that such transfer of the Shares will not cause a default under the Nonaffiliate
Real Property Leases in substantially the form of Exhibit 1.2.7(e) (the
"Estoppel Certificates"). As of the Closing, the Company shall deliver to the
Purchaser (i) the New Affiliate Real Property Leases; and (ii) the Consents to
Transfer and the Estoppel Certificates.
2
<PAGE>
1.2.8 Copies of all of the Company's employment and personnel
records, books and records relating or pertaining to the Company's Business,
including all sales records and similar data (hereinafter collectively referred
to as the "Records"). The Company shall deliver to the Purchaser copies of the
Records upon the written request of the Purchaser. The Shareholders and the
Company reserve the right to inspect such Records at such reasonable times and
places after Closing for any legitimate business purpose including tax audits.
1.2.9 All Development Efforts of the Company. For purposes of this
Agreement, "Development Efforts" means all reasonable steps taken in, towards or
in furtherance of the development of additional Burger King restaurants (other
than the Restaurants), and all materials, correspondence, files or other
information or media, however stored, regarding same, where the locations and
development plans for such restaurants (other than the Restaurants) have been
approved by Purchaser within 10 days following the date of this Agreement (for
Development Efforts made prior to or within 10 days following the date of this
Agreement) or afterwards in advance thereof.
1.3 Company Cash. Upon the Closing, the Purchaser agrees to purchase the
amount of the Company's cash as of the Closing.
1.4 Purchase Price for the Shares. The purchase price for the Shares
shall be Twenty Six Million and no/100 Dollars ($26,000,000), adjusted pursuant
to Section 1.5, decreased by the estimated amount of the Liabilities (as
hereinafter defined), increased by the estimated dollar amount of the Company's
cash at 11:59 p.m. on the Closing Date (as hereinafter defined), increased by
the estimated dollar amount of the Inventory (as hereinafter defined), and
increased by the amount of all reasonable, documented expenses incurred prior to
the Closing Date in connection with Development Efforts (the "Development
Expenses"). The foregoing calculation is referred to as the "Purchase Price".
The Purchase Price, minus the Escrow Amount (as hereinafter defined), shall be
paid in cash at the Closing to the Shareholders in proportion to the number of
Shares held by each.
1.5 Pre-Closing Estimates; Post-Closing Reconciliation. Within 48 hours
prior to the Closing, the parties shall jointly agree on estimates of the
Prorations and Adjustments pursuant to Section 1.6, the Liabilities, the cash of
the Company, the Inventory and the Development Expenses, each as of 11:59 p.m.
on the Closing Date, provided, however, that the figure of $6,000 shall be used
for the estimated Inventory at each Operational Restaurant. Such estimates
shall be used to adjust the Purchase Price pursuant to Section 1.4 above.
Except for the Liabilities, which shall be governed by Section 1.8 below, within
15 days following the Closing, the Company shall determine the actual dollar
amount of such Prorations and Adjustments, cash and Inventory, and, to the
extent the aggregate of these amounts exceeds the aggregate amount of the
estimates thereof made pursuant to the first sentence of this Section 1.5,
Purchaser shall pay within seven days thereafter the amount of such excess to
the Shareholders in proportion to the number of Shares held by each prior to the
Closing. To the extent the aggregate of such amounts is less than the aggregate
amount of such estimates thereof, Purchaser shall be entitled to a disbursement
from the Escrow Amount (as defined in Section 1.9 below) in the amount of such
shortfall.
3
<PAGE>
1.6 Prorations and Adjustments. The Purchase Price shall be adjusted by
all customary prorations with respect to the obligations under the Company's
contracts and agreements, utility and fuel charges, personal property taxes,
prepaid items (including, but not limited to, deposits on the leases, utilities
and telephone service for the Restaurants and all prepaid amounts in respect of
real estate taxes that have been paid by the Company prior to the Closing Date),
and other proratable charges relating to the operation of the Restaurants, as of
11:59 p.m. on the Closing Date. All real estate taxes that are due and payable
during the tax year in which the Closing occurs shall, when received, be
prorated as of 11:59 p.m. on the Closing Date. All rentals, including minimum
and percentage rentals, and other monetary obligations under the real property
leases pertaining to the Restaurants shall be adjusted for the month in which
the Closing occurs. The Purchase Price shall also be increased by the amount of
any security and other deposits of the Company as of 11:59 p.m. on the Closing
Date.
1.7 Inventory. On or within 24 hours after the Closing Date, an inventory
shall be taken by the Company (with the participation of the Purchaser) of all
merchantable food, paper, new uniforms, current promotional items and other
merchantable miscellaneous items (the "Inventory") located at the Restaurants as
of 11:59 p.m. on the Closing Date. The Purchaser agrees to pay for the
Inventory of the Company at the Company's actual Inventory purchase price.
1.8 Liabilities of the Company. The Purchase Price shall be reduced by the
aggregate dollar amount of all the liabilities (the "Liabilities") of the
Company as of the Closing Date. For purposes of this Agreement, the term
"Liabilities" shall include the dollar amount of any prepayment penalties or
other fees for which the Company could become liable upon the prepayment of any
other Liabilities existing on the Closing Date. The Company shall provide the
Purchaser an estimate of the Liabilities five business days prior to the Closing
Date and the Company shall provide to the Purchaser a final balance sheet of the
Company as of the Closing Date within thirty (30) days after the closing (the
"Closing Date Balance Sheet").
1.9 Escrow Amount. From the Purchase Price, the sum of $700,000 (the
"Escrow Amount") shall be escrowed and held by the Escrow Agent (as defined in
the Escrow Agreement attached hereto as Exhibit 1.9 (the "Escrow Agreement"))
and shall be distributed in accordance with the terms set forth in the Escrow
Agreement. The Escrow Amount shall cover those Liabilities that may have been
incurred by the Company as of the Closing Date that may not have been either
paid or accrued by the Company on the Closing Date Balance Sheet and shall
secure the Shareholders' indemnification obligations under this Agreement as set
forth in Section 8.1.
ARTICLE II -- CLOSING AND TERMINATION
2.1 Time, Date and Place. The closing of the purchase and sale of the
Shares and the other transactions contemplated by this Agreement (referred to
throughout this Agreement as the "Closing") shall take place at the offices of
Poyner & Spruill, L.L.P., Suite 4000, 100 North Tryon Street, Charlotte, North
Carolina 28202-4010, or at such other place as Shareholders and Purchaser shall
agree. The time, place and date of the Closing are referred to throughout this
Agreement as the "Closing Date." Unless this Agreement is earlier terminated as
provided for herein, the Closing shall
4
<PAGE>
occur on September 30, 1997, or as soon as practicable following satisfaction or
waiver of all of the conditions set forth in Section 7.1 and 7.2 hereof,
whichever later occurs.
2.2 Termination.
(a) If the Closing contemplated hereunder has not occurred on or
before November 30, 1997, either the Purchaser or the Shareholders may terminate
this Agreement upon written notice to the other party or parties.
(b) If any of the representations, warranties or covenants of the
Company or either Shareholder are found to be untrue or breached in any material
respect, at or prior to Closing, and the Company or such Shareholder shall not
have cured such breach within 30 days after Purchaser shall have given written
notice to the Company of the existence of such breach, Purchaser may terminate
this Agreement upon written notice to the Company.
(c) If any of the representations, warranties or covenants of
Purchaser are found to be untrue or breached in any material respect, at or
prior to Closing, and Purchaser shall not have cured such breach within 30 days
after the Company shall have given written notice to Purchaser of the existence
of such breach, the Company may terminate this Agreement upon written notice to
Purchaser.
(d) This Agreement may be terminated by the written agreement of
Purchaser, the Company and the Shareholders.
(e) This Agreement may be terminated by Purchaser if the Exhibits
hereto are not furnished in accordance with Section 5.1.13 hereof, or are found,
in Purchaser's sole discretion, to be unacceptable within fifteen (15) business
days following receipt by Purchaser thereof and of the letter required by
Section 5.1.13.
(f) This Agreement may be terminated by the Company or Purchaser if
the corrections required by Burger King pursuant to Section 3.22 or Purchaser
pursuant to Section 7.2.8 exceed the dollar limitations set forth in Section
3.22; provided, however, that the Company shall not have the right to terminate
this Agreement pursuant to this paragraph if, within ten (10) days after
quantification of the expenditures required to make such corrections, Purchaser
either waives compliance with Section 3.22 to the extent such expenditures
exceed the dollar limitations set forth in Section 3.22 or agrees to reimburse
the Company to extent such expenditures exceed such dollar limitations.
2.3 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 2.2, this Agreement shall be
of no further force and effect, and, except as specifically provided herein,
with no liabilities or obligations to any party under this Agreement; provided,
however, that the parties shall not be released from any liabilities, claims or
actions regarding the falsity in any material respect of a representation or
warranty set forth in Articles III and IV or a failure to perform or comply with
any material obligation under this Agreement.
5
<PAGE>
2.4 Expenses.
(a) Except as set forth in this Section 2.4, each party hereto shall
bear all of its own expenses in negotiating, executing, performing and
consummating the transactions contemplated by this Agreement.
(b) Upon the Closing of this transaction or the exercise by a third
party of any contractual right to acquire the Restaurants or the Shares that
exists as of the date of this Agreement, the Company and the Shareholders,
jointly and severally, shall pay the sum of $300,000 to Purchaser and/or its
representatives to reimburse such parties for all fees, costs and expenses
incurred by Purchaser associated with this transaction, including but not
limited to legal fees, filing fees (including under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act")), accounting fees
and fees associated with Purchaser's efforts to obtain debt and equity financing
for the acquisition of the Shares. The provisions of this paragraph 2.4 shall
survive the termination of this Agreement for any reason.
ARTICLE III -- REPRESENTATIONS AND WARRANTIES
OF COMPANY AND THE SHAREHOLDERS
The Company and the Shareholders, jointly and severally, represent and
warrant to Purchaser as of the date hereof and as of the Closing on the Closing
Date each of the following:
3.1 Ownership of Company's Stock. The Shareholders are the sole and
exclusive record and beneficial owners of the Shares. As of the date hereof,
the authorized capital stock of the Company consists of ____________ shares of
common stock, par value $1.00 per share, of which only the Shares are issued and
outstanding. As of the Closing Date, the authorized and issued and outstanding
capital stock of the Company will be as stated in the preceding sentence. The
Shares have been duly authorized and validly issued, are fully paid and
nonassessable and were not issued in violation of any preemptive rights pursuant
to applicable law, any agreement to which the Company or either Shareholder is a
party or the articles of incorporation (as amended and/or restated to the date
of this Agreement) of the Company. There is outstanding no security, option,
warrant, right, call, subscription, agreement, commitment or understanding of
any nature whatsoever, real or contingent, to which the Company is a party that
directly or indirectly (i) calls for the issuance, sale, pledge or other
disposition of any capital stock of the Company or any securities convertible
into, or other rights to acquire, any of such capital stock, (ii) obligates the
Company to grant, offer or enter into any of the foregoing, or (iii) relates to
the voting or control of such capital stock, securities or rights. No person
has any right to require the Company to register any of its securities under the
Securities Act of 1933, as amended (the "Securities Act").
3.2 Due Organization; Name and Address; Good Standing; Authority of
Company. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of North Carolina. The only name and
business address of the Company that has been used by the Company at any time
within the past three years ending at the date of this Agreement is B & J
RESTAURANTS, INC., 1400 HARDING AVENUE, CHARLOTTE, NC 28204. The Company
6
<PAGE>
has full right, power and authority to own, lease and operate its properties and
assets, and to carry on its business. The Company is duly qualified as a
foreign corporation, and is in good standing, in each jurisdiction where the
conduct of its business or the character of its properties owned or held under
lease require it to be so qualified, except where the failure to be so qualified
would not have a material adverse effect on the business, operations,
properties, assets, liabilities, condition (financial or otherwise), prospects
or results of operations of the Company taken as a whole (a "Company Material
Adverse Effect"). Notwithstanding anything in this Agreement to the contrary,
any reasonable expenses or liabilities incurred by the Company in connection
with the Development Efforts shall not be taken into consideration in
determining whether the Company has suffered a Company Material Adverse Effect.
Each of the jurisdictions in which the Company is qualified as a foreign
corporation is listed in Exhibit 3.2. The Company is not in breach or violation
of, and the execution, delivery and performance of this Agreement will not
result in a breach or violation of, any of the provisions of the Company's
articles of incorporation, as amended and/or restated to the date of this
Agreement (the "Articles") or by-laws, as amended to the date of this Agreement
(the "By-Laws"), or any agreement to which it is a party.
3.3 Authorization and Validity of Agreements. The Shareholders have the
legal capacity, right, power, and authority to enter into this Agreement and all
other agreements and documents contemplated hereby, including the Noncompetition
Agreement (as hereinafter defined), and to perform the transactions contemplated
hereunder and thereunder. The Company has the legal capacity, right, power and
authority to enter into, execute, acknowledge and deliver this Agreement and all
other agreements and documents contemplated hereby and to perform the
transactions contemplated hereunder and thereunder. The execution,
acknowledgment and delivery of this Agreement by the Company and the performance
by the Company of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate and shareholder action. This
Agreement has been duly executed, acknowledged and delivered by the Company and
the Shareholders and is the legal, valid and binding obligation of the Company
and the Shareholders enforceable against each of them in accordance with its
terms, except as such enforceability may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditors' rights generally and (b) general principles of
equity (regardless of whether enforceability is considered in a proceeding at
law or in equity) (the "Limitations"). The Noncompetition Agreement, when
executed, acknowledged and delivered by the Shareholders, will be the legal,
valid and binding obligation of each Shareholder, enforceable against such
Shareholder in accordance with its terms, except as such enforceability may be
limited by the Limitations.
3.4 Agreement Not in Conflict with Other Instruments; Required Approvals
Obtained. The execution, delivery and performance of this Agreement by the
Company and the Shareholders and the consummation by them of the transactions
contemplated hereby will not, subject to the governmental filings and other
matters referred to in the next succeeding sentence, conflict with, or
constitute or result in, a breach, default or violation of (with or without the
giving of notice or the passage of time or both) any of the terms, provisions or
conditions of, (a) the Articles or By-Laws of the Company; (b) any law,
ordinance, regulation or rule applicable to the Company; (c) any order,
judgment, injunction or other decree by which the Shares, the Company or any of
the Company's assets or properties are bound; or (d) any written or oral
contract, agreement, or commitment to which the Company is a party or by which
the Shares, the Company or any of the Company's assets
7
<PAGE>
or properties are bound, nor will such execution, delivery and performance
result in the creation of any lien, security interest, adverse claim or other
encumbrance upon the Shares, any properties, assets or rights of the Company or
give rise to any right of termination, amendment, cancellation or acceleration.
Except for filings as may be required under the HSR Act, no consent, approval or
authorization of, exemption by, or filing with, any court or tribunal or
administrative, governmental or regulatory body, authority or agency (a
"Governmental Entity"), or any third party, is required in connection with the
execution, delivery and performance by the Company and the Shareholders of this
Agreement and the consummation by them of the transactions contemplated hereby.
3.5 No Default. The Company is not in breach, default or violation (with
or without the giving of notice or the passage of time or both) of any term,
condition or provision of (a) its Articles or By-Laws; (b) any law, ordinance,
regulation or rule applicable to the Company; (c) any order, judgment,
injunction or other decree by which the Shares, the Company or any of the
Company's assets or properties is bound; or (d) any written or oral contract,
agreement, or commitment to which the Company is a party or by which the Shares,
the Company or any of the Company's assets or properties is bound.
3.6 Compliance with Laws. The Company has complied in all material
respects with all laws, statutes, rules, regulations, judgments, decrees and
orders applicable to its business. The Company now holds, and in the past has
at all times held, and the Company is now, and has at all times in the past
been, in material compliance with, all material licenses, permits and
authorizations necessary for the lawful conduct of its business under and
pursuant to, and is now in material compliance with, and in the past has
complied in all material respects with, all applicable statutes, laws,
ordinances, rules and regulations of all federal, state, local and foreign
Governmental Entities having jurisdiction over it or over any part of its
operations and is not in violation of any thereof.
3.7 Legal Proceedings. There is not now pending nor, to the knowledge of
the Shareholders or the Company, threatened, any suit, claim, action, proceeding
or investigation in any court or before any governmental or regulatory authority
that (a) seeks to enjoin or obtain damages in respect of the consummation of the
transactions contemplated hereby, or (b) individually or in the aggregate, could
reasonably be expected to have a Company Material Adverse Effect. The Company
is not subject to any outstanding order, writ, judgment or decree that,
individually or in the aggregate, in the future could reasonably be expected to
result in a Company Material Adverse Effect or prevent or delay the consummation
of the transactions contemplated hereby.
3.8 Financial Information. Copies of the audited balance sheet of the
Company as of December 31, 1996, and the unaudited balance sheets of the Company
as of December 31, 1994 and 1995, and as of April 30, 1997, and the audited
statement of operations, stockholders' equity and cash flows of the Company for
the year ended December 31, 1996, and the unaudited statements of operations,
stockholders' equity and cash flows of the Company for the years ended December
31, 1994 and 1995 and for the four months ended April 30, 1997, including the
notes thereto (collectively the "Financial Statements"), have been supplied to
Purchaser and are attached hereto as Exhibit 3.8. The audited Financial
Statements were prepared in accordance with generally accepted accounting
principles ("GAAP") (as in effect from time to time) applied on a consistent
basis, and the Financial Statements fairly present the financial position of the
Company as at the
8
<PAGE>
dates thereof and the results of its operations and its cash flows for the
period then ended, subject, in the case of the unaudited Financial Statements,
to normal, recurring year-end audit adjustments. Except as and to the extent
reflected or reserved against in the Financial Statements as of and for the
period ended April 30, 1997, or disclosed in Exhibit 3.8, the Company has no
liability or obligation of any kind, whether accrued, absolute, contingent or
other, that would have a Company Material Adverse Effect. Since April 30, 1997,
the Company has incurred no liability or obligation of any kind which, in any
case or in the aggregate, has had or is reasonably likely to have a Company
Material Adverse Effect.
3.9 Tax Matters. For the purpose of this Section 3.9, "Taxes" means any
federal, state, county, local or foreign taxes, charges, fees, levies, or other
assessments, including, without limitation, all income, alternative minimum,
sales and use, ad valorem, transfer, gains, profits, excise, franchise, real and
personal property, gross receipt, capital stock, production, business and
occupation, disability, employment, payroll, license, estimated, stamp, custom
duties, severance or withholding taxes or charges imposed by any Governmental
Entity, and includes any interest and penalties on or additions to any such
taxes, and "Tax Return" means any report, return or other information required
to be supplied to a Governmental Entity with respect to Taxes. Except as set
forth in Exhibit 3.9: (i) the Company has filed all Tax Returns required to be
filed by applicable law and all Tax Returns were in all respects (and, as to Tax
Returns not filed as of the date hereof, will be) true, complete and correct and
filed on a timely basis, (ii) the Company has, within the time and in the manner
prescribed by law, paid (and until the Closing Date will pay within the time and
in the manner prescribed by law) all Taxes that are due and payable; (iii) the
Company has established (and until the Closing Date will maintain) on its books
and records reserves adequate to pay all Taxes not yet due and payable in
accordance with GAAP that are reflected in the Financial Statements to the
extent required as of the date thereof; (iv) there are no Tax liens upon the
assets of the Company except liens for Taxes not yet due or Taxes that are being
contested in good faith; (v) the Company has complied (and until the Closing
Date will comply) in all respects with the provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), relating to the payment and withholding
of Taxes, including, without limitation, the withholding and reporting
requirements under Code Sections 1441 through 1464, 3401 through 3606, as well
as similar provisions under any other laws, and has, within the time and in the
manner prescribed by law, withheld from employee wages and paid over to the
proper Governmental Entities all amounts required; (vi) the Company has not
requested any extension of time within which to file any Tax Return, which Tax
Return has not since been filed; (vii) the Company has not executed any
outstanding waivers or comparable consents regarding the application of the
statute of limitations with respect to the assessment or collection of any Taxes
or Tax Returns for which the statute of limitations has not yet expired; (viii)
no deficiency for any Taxes has been proposed in writing, asserted in writing or
assessed against the Company that has not been resolved and paid in full; (ix)
no audits or other administrative proceedings or court proceedings are presently
in progress or pending (or, to the best of the knowledge of the Company and the
Shareholders, threatened) with regard to any Taxes or Tax Returns of the
Company; (x) the Company has not received a Tax Ruling (as defined below) or
entered into a Closing Agreement (as defined below) with any taxing authority
that would have a continuing adverse effect after the Closing Date ("Tax Ruling"
shall mean a written ruling of a taxing authority relating to Taxes and "Closing
Agreement" shall mean a written and legally binding agreement with a taxing
authority relating to Taxes); (xi) the Company has made available to
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Purchaser complete and accurate copies of all Tax Returns, and any amendments
thereto, filed by the Company for all taxable years ending on or prior to the
Closing Date; (xii) no agreements relating to allocating or sharing of Taxes
exist among the Company and any other entity; (xiii) the Company has not filed
(or will file prior to the Closing Date) a consent pursuant to Code Section
341(f) or has agreed to have Code Section 341(f)(2) apply to any disposition of
a subsection (f) asset (as that term is defined in Code Section 341(f)(4)) owned
by the Company; (xiv) no property of the Company is "tax-exempt use property"
within the meaning of Code Section 168; (xv) the Company is not required to
include in income any adjustment pursuant to Code Section 481(a) by reason of a
voluntary change in accounting method initiated by the Company, the Internal
Revenue Service has not proposed any such adjustment or change in accounting
method; (xvi) the Company is not a party to any agreement, contract, or
arrangement that would result, separately or in the aggregate, in the payment of
any "excess parachute payments" within the meaning of Code Section 280G in
connection with the transactions occurring pursuant to this Agreement.
3.10 Franchise Agreements. The Franchise Agreements are full, complete,
true and correct Franchise Agreements between the Company and Burger King
Corporation, and are, and shall continue to be until the Closing on the Closing
date, in full force and effect. The Company is not in breach of or default under
any provision of the Franchise Agreements, and, to the best of the Shareholders'
and/or the Company's knowledge, no condition exists which, with passage of time
or the giving of notice or both, will result in a material breach or default by
the Company of any provision of any of the Franchise Agreements.
3.11 Title to Properties; Leases. The Company owns and has good, valid
and marketable title to or, in the case of leased properties, a good, valid and
(except as otherwise restricted by the applicable lease agreement) marketable
leasehold interest in, all of its assets and properties, including all such
assets (real, personal or mixed, tangible or intangible) reflected on the
balance sheet of the Company as of April 30, 1997 included in the Financial
Statements, except those assets (i) disposed of in the ordinary course of
business after April 30, 1997 or (ii) those the loss of which would not result
in a Company Material Adverse Effect. The Company holds title to each such
property and asset free and clear of all liens, adverse claims, easements,
rights of way, servitudes, zoning or building restrictions, or any other rights
of others or other adverse interests of any kind, including leases, chattel
mortgages, conditional sales contracts, collateral security arrangements and
other title or interest retention arrangements (collectively, "Encumbrances"),
except (a) those reflected or reserved against in the Financial Statements, (b)
Encumbrances for Taxes (as defined above), assessments and other governmental
charges which are not due and payable or which may thereafter be paid without
penalty and (c) those Encumbrances which would not result in a Company Material
Adverse Effect.
3.12 Records. The corporate records of the Company that have been
delivered by the Company to Purchaser or that shall be delivered by the Company
to Purchaser are true, complete and correct in all material respects.
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3.13 Employment Matters.
(a) Exhibit 3.13 contains a complete and accurate list of (i) the
names of each director and officer of the Company and each management employee
of the Company, (ii) all employment contracts between the Company and each
officer or employee thereof (excluding any contract that has been fully
performed and oral agreements of employment terminable at will without payment
of severance or other benefits except as are available to employees generally),
(iii) all collective bargaining agreements between the Company and employee
representatives and any other labor agreements to which the Company is a party,
(iv) all employee benefit plans, programs, policies or arrangements, whether or
not constituting "employee benefit plans" under Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), including, without
limitation, all pension benefits, welfare benefits, deferred compensation,
supplemental retirement, severance, hospitalization, medical insurance, life
insurance, salary continuation, sick leave, vacation pay, change-of-control
agreements, bonus, incentive, stock option, stock purchase, phantom stock, stock
appreciation rights, performance shares, and similar plans either currently
maintained by the Company or, if terminated, under which employees or former
employees have rights that are outstanding, and all awards and agreements under
any of such plans pursuant to which any employees or former employees hold
outstanding rights, and (v) the name of each retired employee, officer or
director, if any, of the Company who is receiving or is entitled to receive any
payments not covered by any employee benefit plan and his or her age, sex and
current benefits. Each of the contracts or agreements listed in the previous
sentence shall also constitute "Material Contracts" for purposes of the
representations and warranties contained in Section 3.17 of this Agreement.
(b) Exhibit 3.13 includes a complete and accurate list of all employee
pension benefit plans (within the meaning of section 3(2) of ERISA) that are
subject to the provisions of Section 401 of the Code and which the Company
currently maintains or to which the Company contributes or is required to
contribute on behalf of its employees or as to which the Company has any other
obligation. With respect to each such plan, the most recent summary plan
descriptions and the most recently filed Form 5500 has been provided to the
Purchaser. Exhibit 3.13 sets forth which of such plans is a multiemployer plan
as defined in Section 414(f) of the Code, or Section 3(37) of ERISA. With
respect to each plan described above in this Section 3.13 (b): (i) the plan is
qualified under Section 401 of the Code and the trust maintained pursuant
thereto is exempt from federal income taxation under Section 501 of the Code,
and nothing has occurred to cause the loss of such qualification or exemption,
(ii) all contributions required by the Code to be made to the plan for the plan
year most recently ended and for all prior plan years have been made timely in
accordance with the Code and ERISA, and the Company does not have a minimum
funding waiver outstanding with respect to such plan, (iii) the administrators
or sponsors of the plan have complied in all material respects with applicable
ERISA and Code requirements, including requirements as to the filing of reports,
returns, documents, and notices with the Secretary of Labor and the Secretary of
the Treasury, or the furnishing of such documents to participants or
beneficiaries of such plan, and (iv) the Company has in all material respects
discharged all duties it has to the plan under Sections 404 and 405 of ERISA,
and no party to whom the Company is obligated to indemnify for a breach of those
provisions has committed any such breach.
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(c) With respect to any ERISA plan that is a multiemployer plan within
the meaning of Section 3(37) of ERISA to which the Company contributes (or has
at any time contributed or had an obligation to contribute), the Company has or
will have, as of the Closing Date, made or accrued for all contributions to each
plan required by the terms of the plan or any collective bargaining agreement,
and the Company would not be subject to any withdrawal liability under Part I of
Subtitle E of Title IV of ERISA if, as of the Closing Date, the Company was to
engage in a complete withdrawal (as defined in ERISA Section 4203) or partial
withdrawal (as defined in ERISA Section 4205) from such plan.
(d) Exhibit 3.13 includes a complete and accurate list of each of the
following that is currently maintained by the Company or pursuant to which it
has any obligation: any unfunded deferred compensation, supplemental death,
disability, medical reimbursement, employee welfare benefit plan (within the
meaning of section 3(1) of ERISA) and, to the extent not included in Section
4.17(b) above, each employee pension benefit plan. With respect to each such
plan that is funded or required by its express terms to be funded through
insurance, all premiums due and payable with respect to such insurance have been
paid. With respect to each of such plans, the most recent summary plan
description and the most recently filed Form 5500 have been provided to the
Purchaser.
(e) Exhibit 3.13 includes a complete and accurate list of (i) all
governmental or court required plans, including, but not limited to, affirmative
action plans, with respect to the Company, and (ii) all governmental or court
ordered audits for compliance with applicable law that would require the
continuation of any such plan or the implementation of any such plan that has
not been put into effect on the date of this Agreement.
(f) All of the employee benefit plans, programs, policies or
arrangements listed or described on Exhibit 3.13 are legally cancellable or
terminable as of the Closing on the Closing Date without liability to the
Company, other than Liabilities fully and completely reflected on the Closing
Date Balance Sheet, and shall be duly and legally cancelled or terminated as of
the Closing.
3.14 Employee Relations. The Company is in compliance in all material
respects with all federal, state, local or foreign laws, ordinances, rules and
regulations respecting employment and employment practices, terms and conditions
of employment and wages and hours, and has not and is not engaged in any unfair
labor practice. No unfair labor practice complaint against the Company is
pending before the National Labor Relations Board (the "NLRB"). There is no
labor strike, jurisdictional dispute, material slowdown or stoppage pending or
threatened against or involving the Company, nor has there been any such strike,
dispute, slowdown or stoppage during the past three (3) years. Except as
disclosed in Exhibit 3.14, no claim or grievance exists, has been threatened in
writing or has been settled since April 30, 1997 that might have a Company
Material Adverse Effect (including, without limitation, claims of discrimination
based on race, sex or age). No arbitration proceeding arising out of or under
any collective bargaining or other labor agreement is pending and no claim
therefor has been asserted. No collective bargaining or other labor agreement is
currently being negotiated by the Company. There is no organizational activity
involving the Company pending or threatened by any labor union or group of
employees. There are no representation
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proceedings involving the Company pending or threatened with the NLRB, and no
labor union or group of the Company's employees has made a demand for
recognition which is currently pending.
3.15 Absence of Certain Changes or Events. Since April 30, 1997, and
except as disclosed on Exhibit 3.15, the Company has not engaged in or
experienced any of the following:
3.15.1 Sold, assigned, transferred, leased, disposed of, or agreed
to sell, assign, transfer, lease, or dispose of, any of the assets, except
Inventory sold and Equipment replaced in the ordinary course of the Company's
business, as such business has been operated historically.
3.15.2 Made any capital expenditure in excess of Five Thousand
Dollars ($5,000) per Operational Restaurant or entered into any contract,
agreement, arrangement, understanding or commitment therefor, or acquired or
leased any assets or property of any third person or party other than in the
ordinary course of the Company's business, as such business has been operated
historically.
3.15.3 Suffered any material adverse change in the Company's
operations, earnings, assets, liabilities, or business (financial or otherwise).
3.15.4 Failed to pay any indebtedness or other obligation, including
any taxes and other charges, when due.
3.16 Adverse Conditions. Except as set forth in Exhibit 3.16, neither the
Company nor any of the Shareholders has any knowledge of any past, present or
future condition, facts or circumstances which has had or which might have a
Company Material Adverse Effect or prevent Purchaser from carrying on the
Company's business, excluding general economic, financial and market conditions
that are known to the public.
3.17 Material Contracts. Attached hereto as Exhibit 3.17 is a list of the
following, which is accurate and complete as of the date hereof: all leases,
contracts, licenses, agreements or other commitments of the Company as obligor
involving a liability, obligation, contingent liability or contingent obligation
in excess of $5,000 per Restaurant ("Material Contracts"). The Company has
performed in all material respects the obligations required to be performed by
it to date under each Material Contract, the Company is not in default or
alleged to be in default under any Material Contract, and no event or act known
to the Company has occurred that, with or without the giving of notice or the
passage of time or both, would constitute such a default.
3.18 [Intentionally Omitted]
3.19 Full Disclosure. This Agreement (including the Exhibits hereto) does
not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements contained herein not misleading.
There is no fact known to the Company or to any of the Shareholders which is not
disclosed in this Agreement which materially adversely affects the accuracy of
the representations and warranties contained in this Agreement or the Company's
financial condition, operations, business, earnings, assets, or liabilities.
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3.20 No Brokerage. Neither the Company nor any of the Shareholders has
incurred any obligation or liability, contingent or otherwise, for brokerage
fees, finder's fees, agent's commissions, or the like in connection with this
Agreement or the transactions contemplated hereby, except for the fee to be paid
by the Shareholders to the Cypress Consulting Group, Inc.
3.21 Notice of Violations. Neither the Company nor any of the
Shareholders has received any notice of and, to the best of their knowledge,
there is no violation or alleged violation of, any legal requirement affecting
the Restaurants, including, without limitation, any violation or alleged
violation of any local, state or federal environmental, zoning, handicap or fire
law, ordinance, code, regulation, rule or order, and specifically including,
without limitation, variances or special permits affecting the Restaurants. The
Company has performed all conditions to any permits or other governmental
approvals or licenses with respect to the Restaurants, including, without
limitation, the payment of all development impact or other fees and developer
exactions.
3.22 Condition of Restaurants. The Restaurants comply, in all material
respects, with the current Burger King Corporation Repairs and Maintenance
Standards (the "Standards"). In the event Burger King Corporation or the
Purchaser (pursuant to Section 7.2.8) requires any modification to the
Restaurants as a result of the failure of the Restaurants to meet the Standards,
the Company shall, at its sole cost and expense, effect such repairs to bring
all Restaurants into compliance with the Standards; provided, however, that the
Company shall not be required to make any improvements to the Restaurants to
comply with the Burger King Corporation's Project Jennifer standards or other
merely cosmetic changes not related to the operation, functionality or safety of
the Restaurants, and further provided that the Company shall not be required to
make any improvements to the Restaurants in excess of $5,000.00 per Restaurant
or $100,000.00 in the aggregate for all Restaurants. Such dollar limitations
shall not, however, apply to expenditures in connection with the continued
development of the Development Restaurants.
3.23 Insurance. Included in Exhibit 3.23 is a complete and accurate list
of all Insurance Policies of the Company. For purposes of this Agreement,
"Insurance Policy" shall mean any insurance policy with respect to the
properties, assets, operations and business of the Company with respect to which
a premium has been paid within the last 13 months. All Insurance Policies
listed in Exhibit 3.23 are in full force and effect. Except as disclosed in
Exhibit 3.23, as of the date of this Agreement, there are no pending claims
against the insurers under the Insurance Policies by the Company. Except as
disclosed in Exhibit 3.23, there are no unsettled claims as to which the
insurers have denied liability and with respect to which there is a reasonable
likelihood of a settlement or determination adverse to the Company. To the
Company's best knowledge, there are no circumstances existing which would enable
the insurers to avoid liability under the Insurance Policies in accordance with
the terms thereof. There are no material claims under the Insurance Policies
that have not been properly filed by the Company, and no insurance company has
refused to renew any material Insurance Policy of the Company during the past 18
months. Each of the Insurance Policies can be terminated at will by the Company
without the payment of any additional premium thereon or penalty associated
therewith.
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ARTICLE IV -- REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Company and the Shareholders,
as of the date hereof and as of the Closing on the Closing Date, each of the
following:
4.1 Due Organization; Good Standing; Power. Purchaser is a corporation
duly incorporated, validly existing, and in good standing under the laws of the
State of Delaware. Purchaser has full right, power and authority to enter into
this Agreement and the Noncompetition Agreement and to perform its obligations
hereunder and thereunder. Purchaser is not in breach or violation of and the
execution, delivery and performance of this Agreement will not result in a
breach or violation of any of the provisions of Purchaser's Certificate of
Incorporation or Bylaws.
4.2 Authorization and Validity of Documents. The execution, delivery and
performance by Purchaser of this Agreement and the Noncompetition Agreement and
the transactions contemplated hereby and thereby, have been duly and validly
authorized by Purchaser. This Agreement has been duly executed, acknowledged
and delivered by Purchaser and is a legal, valid and binding obligation of
Purchaser, and the Noncompetition Agreement, when executed and delivered, will
be the legal, valid and binding obligation of Purchaser, each enforceable
against Purchaser in accordance with their terms except as such enforceability
may be limited by the Limitations.
4.3 No Brokerage. Purchaser has not incurred any obligation or liability,
contingent or otherwise, for brokerage fees, finder's fees, agent's commissions,
or the like in connection with this Agreement or the transactions contemplated
hereby.
4.4 Liabilities Remaining. Purchaser covenant that Purchaser will pay all
liabilities it has agreed to pay pursuant to the terms of this Agreement.
4.5 Burger King Obligations. Except as set forth on exhibit Exhibit 4.5
attached hereto, Purchaser is not in material default of any of its franchise
obligations to Burger King Corporation.
ARTICLE V -- COVENANTS
5.1 Company's and Shareholder's Covenants. The Company and the
Shareholders, jointly and severally, covenant, promise and agree that from the
date hereof and until the Closing, the Company and the Shareholders shall, and
the Shareholders shall cause the Company to perform and comply with each of the
following:
5.1.1 Continue to operate the business of the Company diligently, and
to develop the Development Restaurants and to engage in the Development Efforts,
and otherwise not take any action, omit to take any action, or engage in any
transaction other than acts or transactions in the ordinary course of business,
as such business has been operated historically.
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5.1.2 Preserve the Business of the Company and preserve the
relationship of the Company with suppliers, customers, Burger King Corporation
and others as such relationships have been preserved historically.
5.1.3 Maintain and continue normal and usual maintenance and repair
of the Equipment, the Fixed Assets, and all other assets being sold and
transferred to Purchaser herein.
5.1.4 Cooperate with Purchaser to achieve an orderly transition of
the Business of the Company to Purchaser.
5.1.5 Pay or provide for payment of all sales, use, personal
property, social security, withholding, payroll, unemployment compensation,
income and other taxes, assessments, fees and public charges due and payable by
the Company in respect of its Business and the Assets through the Closing Date
and any portion thereof applicable to any period prior to the Closing Date.
5.1.6 Pay or accrue on the Company's financial statements all wages,
bonuses, commissions and other employment benefits and sums (and all required
taxes, insurance and withholding thereon), including all accrued vacation,
accrued sick leave, accrued benefits and accrued payments (and pro rata accruals
for a portion of a year) due to the Company's employees through the Closing
Date.
5.1.7 Maintain in effect all Insurance Policies and other employee
benefits covering any employee claims which may be incurred through the Closing
Date.
5.1.8 Exert commercially reasonable efforts to fully perform and
comply with all covenants, promises and agreements hereunder which are required
to be performed or complied with by the Company and the Shareholders prior to or
at the Closing, and exert commercially reasonable efforts to completely satisfy
and fulfill all conditions precedent to the Company's and the Shareholders'
obligations to close hereunder at the Closing on the Closing Date.
5.1.9 Exert commercially reasonable efforts to prevent the occurrence
of any event that could result in any of the Company's or the Shareholders'
representations and warranties contained in this Agreement not being true and
correct at or as of the time immediately after the occurrence of such event, and
the Company and the Shareholders shall promptly notify Purchaser of the
occurrence of any event or the discovery of any fact which would cause any of
their covenants, promises and agreements to be breached or violated or any of
their representations and warranties to become not true and correct or which
could interfere with or prevent the consummation of the transactions
contemplated hereby.
5.1.10 Provide Purchaser and its representatives, subject to the
restrictions contained in Section 7.2.8, with access during normal business
hours to all of the Company's properties, assets and Records, provide Purchaser
and its representatives with such financial and operating data and other
information with respect to the Company's Business, Assets and properties as
Purchaser shall from time to time reasonably request, and permit Purchaser and
its representatives,
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at Purchaser's sole expense, to consult with the Company's representatives,
officers, employees and accountants up to the time of Closing and for 120 days
thereafter.
5.1.11 Take no action which is or would cause a material violation of
any laws of any governments or Governmental Entities.
5.1.12 Take, or cause to be taken, all reasonable actions necessary
to permit Purchaser to furnish all information required under the HSR Act and
promptly cooperate with and furnish information to Purchaser in connection with
any such requirements imposed upon Purchaser or its parent in connection with
the transaction as set forth herein.
5.1.13 Deliver to Purchaser within twenty (20) business days of the
date of execution of this Agreement all Exhibits to be furnished by Purchaser,
together with a letter certifying that all such Exhibits have been furnished and
that the information contained therein is true and complete in all material
respects.
5.2 Purchaser's Covenants. Purchaser covenants and agrees to fully perform
and comply with all covenants, promises and agreements hereunder that are
required to be performed or complied with by Purchaser prior to or at the
Closing, and use commercially reasonable efforts to completely satisfy and
fulfill all conditions precedent to Purchaser's obligations to close hereunder
at the Closing on the Closing Date.
ARTICLE VI -- OPINIONS OF COUNSEL
6.1 Opinion of Company's and Shareholders' Counsel. At the Closing, the
Company and the Shareholders shall deliver to Purchaser the opinion of their
counsel, dated as of the Closing Date, as to the following:
6.1.1 Due Organization; Good Standing; Authority of Company. The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of North Carolina. The Company has full
right, power, and authority to own, lease and operate its properties and assets,
and to carry on its Business. The Company is duly licensed, qualified and
authorized to do business in each jurisdiction in which the properties and
assets owned by it or the nature of the business conducted by it make such
licensing, qualification and authorization legally necessary. The Company is not
in breach or violation of, and the execution, delivery and performance of this
Agreement will not result in a breach or violation of, any of the provisions of
the Company's Articles or By-Laws.
6.1.2 Authorization and Validity of Agreements. The Company and the
Shareholders have the legal capacity, right, power and authority to enter into
this Agreement and the Shareholders have the legal capacity, right, power and
authority to enter into the Noncompetition Agreement. The Company has the full
right, power and authority to execute, acknowledge and deliver this Agreement
and to perform the transactions contemplated by this Agreement. The execution,
acknowledgment and delivery of this Agreement by the Company and the
Shareholders
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and the performance by the Company and the Shareholders of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate and shareholder action. This Agreement has been duly executed,
acknowledged and delivered by the Company and by the Shareholders and is the
legal, valid and binding obligation of the Company and the Shareholders,
enforceable against the Company and the Shareholders in accordance with its
terms, except in each case as such enforceability may be limited by general
principles of equity, bankruptcy, insolvency, moratorium and similar laws
relating to creditors' rights generally. The Noncompetition Agreement, when
executed, will be the legal, valid and binding obligation of the Shareholders,
enforceable against the Shareholders in accordance with its terms, except in
each case as such enforceability may be limited by general principles of equity,
bankruptcy, insolvency, moratorium and similar laws relating to creditors'
rights generally, and only to the extent that a court of competent jurisdiction
deems the time and area restrictions in such Noncompetition Agreement to be
reasonable.
6.1.3 Agreement Not in Conflict with Other Instruments; Required
Approvals Obtained. The execution, acknowledgment, delivery, and performance of
this Agreement by the Company and the Shareholders and the Noncompetition
Agreement by the Shareholders, and the consummation of the transactions
contemplated by this Agreement and the Noncompetition Agreement will not (a)
violate or require any consent, approval, or filing under, (i) any laws of any
governments or any Governmental Entities, or (ii) any judgment, injunction,
order, writ or decree of any court, arbitrator, government or Governmental
Entity by which the Company or any of the Assets or the Shareholders are bound;
(b) to such counsel's knowledge, conflict with, require any consent, approval,
or filing under, result in the breach or termination of any provision of,
constitute a default under, or result in the creation of any claim, security
interest, lien, charge, or encumbrance upon any of the Assets pursuant to, (i)
the Company's Articles or By-Laws; (ii) any indenture, mortgage, deed of trust,
license, permit, approval, consent, franchise, lease, contract, or other
instrument, document or agreement to which the Company is a party or named; or
(iii) any judgment, injunction, order, writ or decree of any court, arbitrator,
government or Governmental Entity by which the Company or any of the Assets is
bound.
6.1.4 Legal Proceedings. Except as disclosed in Exhibit 6.1.4, there
is no action, suit, proceeding, claim or arbitration, or any investigation by
any person or entity, including any government or Governmental Entity, (i)
pending, to which the Company or the Shareholders are a party, or to the
knowledge of the Company or the Shareholders, threatened against or relating to
the Company, the Company's business or any of the Assets, or (ii) challenging
the Company's or the Shareholders' right to execute, acknowledge, deliver,
perform under or consummate the transactions contemplated by this Agreement and
the Noncompetition Agreement, or (iii) asserting any right with respect to any
of the Assets; and there is no basis known to such counsel for any such action,
suit, proceeding, claim, arbitration or investigation.
6.2 Opinion of Purchaser's Counsel. At the Closing, Purchaser shall
deliver to the Company and to the Shareholders the opinion of its counsel, as to
the following:
6.2.1 Due Organization; Good Standing; Authority of Purchaser.
Purchaser is a corporation duly incorporated, validly existing, and in good
standing under the laws of the State of Delaware. Purchaser has all requisite
corporate power to execute, acknowledge and deliver this
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Agreement and the Noncompetition Agreement and to perform its obligations
hereunder and thereunder. Purchaser is not in breach or violation of and the
execution delivery and performance of this Agreement will not result in a breach
or violation of any of the provisions of Purchaser's Certificate or By-Laws.
6.2.2 Authorization and Validity of Agreements. The execution,
delivery, and performance of this Agreement and the Noncompetition Agreement and
the consummation by Purchaser of the transactions contemplated hereby and
thereby, have been duly and validly authorized by Purchaser. This Agreement and
the Noncompetition Agreement have been duly executed, acknowledged and delivered
by Purchaser and are the legal, valid, and binding obligation of Purchaser,
enforceable against Purchaser in accordance with their respective terms except
as such enforceability may be limited by general principles of equity,
bankruptcy, insolvency, moratorium and similar laws relating to creditors'
rights generally.
6.2.3 Agreement Not in Conflict with Other Instruments; Required
Approvals Obtained. The execution, acknowledgment, delivery, and performance of
this Agreement by Purchaser, and the consummation of the transactions
contemplated by this Agreement will not (a) violate or require any consent,
approval, or filing under, (i) any laws of any governments or any Governmental
Entities, or (ii) any judgment, injunction, order, writ or decree of any court,
arbitrator, government or Governmental Entity by which Purchaser is bound; (b)
to such counsel's knowledge, conflict with, require any consent, approval, or
filing under, result in the breach or termination of any provision of,
constitute a default under, (i) Purchaser's Certificate or By-Laws; (ii) any
indenture, mortgage, deed of trust, license, permit, approval, consent,
franchise, lease, contract, or other instrument, document or agreement to which
Purchaser is a party or named; or (iii) any judgment, injunction, order, writ or
decree of any court, arbitrator, government or Governmental Entity by which
Purchaser is bound.
ARTICLE VII -- CONDITIONS
7.1 Shareholders' Conditions to Close. The Shareholders' obligation to
close the transactions contemplated hereby at the Closing shall be subject to
the complete satisfaction and fulfillment of all of the following conditions
precedent, any or all of which may be waived in whole or in part by the
Shareholders (but no such waiver of any such condition precedent shall be or
constitute a waiver of any covenant, promise, agreement, representation or
warranty made by Purchaser in this Agreement):
7.1.1 All representations and warranties made by Purchaser in this
Agreement shall be complete and accurate at and as of the Closing on the Closing
Date. The Shareholders shall have been furnished with a certificate, signed by
an authorized officer of Purchaser, and dated the Closing Date to the foregoing
effect.
7.1.2 All covenants, promises and agreements made by Purchaser in
this Agreement and all other actions required to be performed or complied with
by Purchaser under this Agreement prior to or at the Closing shall have been
fully performed or complied with by Purchaser.
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<PAGE>
The Shareholders shall have been furnished with a certificate, signed by an
authorized officer of Purchaser, and dated the Closing Date to the foregoing
effect.
7.1.3 Purchaser shall deliver to the Shareholders by wire transfer or
bank check the amount of the Purchase Price (less the Escrow Amount), set forth
in Section 1.2 of this Agreement.
7.1.4 The Company and the Shareholders shall have received an opinion
of counsel for Purchaser as of the Closing Date, as required by Section 6.2.
7.1.5 Purchaser shall not have received, prior to Closing,
any notification under the HSR Act that seeks to prohibit Purchaser, the
Shareholders and the Company from consummating the transaction set forth in this
Agreement, and all applicable waiting periods under the HSR Act shall have
expired or been earlier terminated.
7.1.6 The Company shall have received, if required under the terms of
the applicable Nonaffiliate Real Property Lease, consent from the landlord for
each such Restaurant location with regard to the transfer of the Shares by the
Shareholders to Purchaser.
7.1.7 The Company and the Shareholders shall have had fifteen days
after receipt of the Exhibits to be furnished by Purchaser to review and
approve, in their reasonable discretion, the information presented thereon. In
the event the Company and the Shareholders determine that the Exhibits are
unacceptable, the Company and the Shareholders shall provide Purchaser with
written notice of such defects and Purchaser shall have ten (10) days in which
to cure such defects prior to Company and the Shareholders exercising their
right to terminate the Agreement.
7.2 Purchaser's Conditions to Close. Purchaser's obligation to close the
transactions contemplated hereby at the Closing shall be subject to the complete
satisfaction and fulfillment of all of the following conditions precedent, any
or all of which may be waived in whole or in part by Purchaser (but no such
waiver of any such condition precedent shall be or constitute a waiver of any
covenant, promise, agreement, representation or warranty made by the Company and
the Shareholders in this Agreement):
7.2.1 All representations and warranties made by the Company and the
Shareholders in this Agreement shall be complete and accurate at and as of the
Closing on the Closing Date. Purchaser shall have been furnished with a
certificate, signed by the Shareholders and an authorized officer of the
Company, and dated the Closing Date to the foregoing effect.
7.2.2 All covenants, promises and agreements made by the Company and
the Shareholders in this Agreement and all other actions required to be
performed or complied with by the Company and the Shareholders under this
Agreement prior to or at the Closing shall have been fully performed or complied
with by the Company and the Shareholders. Purchaser shall have been furnished
with a certificate, signed by the Shareholders and an authorized officer of the
Company, and dated the Closing Date to the foregoing effect.
20
<PAGE>
7.2.3 The Company shall have obtained, and delivered to Purchaser,
copies of all consents, approvals or other authorizations which the Company is
required to obtain from, and any filing which the Company is required to make
with, any governmental authority or agency or any other person including, but
not limited to, consents required from Burger King Corporation (the "Burger King
Consents") in connection with the execution, delivery and consummation of this
Agreement and the other documents associated herewith and the consummation of
the transactions contemplated hereby or thereby (collectively, the "Required
Consents"), in form and substance reasonably satisfactory to Purchaser.
Notwithstanding the foregoing, Purchaser shall be solely responsible for
processing and obtaining the Burger King Consents, any consents required under
the HSR Act and any additional consents or approvals necessary for Purchaser to
purchase the Shares or operate the Business from and after the Closing Date.
7.2.4 Purchaser shall have received all items required to be
delivered or furnished to Purchaser by the Company and the Shareholders
hereunder prior to or at the Closing.
7.2.5 All necessary permits, licenses, Required Consents and
approvals (including the Burger King Consents) required to be obtained by
Purchaser shall have been obtained and paid for by Purchaser or Purchaser shall
have exercised all reasonable efforts to obtain same.
7.2.6 There shall not have occurred any material adverse change in
the business of the Company.
7.2.7 Purchaser shall have received an opinion of counsel for the
Company and the Shareholders, as of the Closing Date, as required by Section 6.1
hereof.
7.2.8 Purchaser and its representatives shall have completed, to
their complete satisfaction, an investigation and examination of all aspects of
the Restaurants and the Assets, including the Financial Statements. No employee
or representative of Purchaser will perform on-site due diligence of the
Restaurants without the Company's prior approval, at which time such employee or
representative will be accompanied by the Company's designee. Purchaser shall
have completed its review of the Restaurants to confirm the Equipment in the
Restaurants is in proper working order and that the Restaurants conform in all
material respects to the Standards (the "Walk-Thru") that apply to the
Restaurants on or before sixty (60) days following the execution of this
Agreement. Purchaser shall itemize any deficiencies noted in the Walk-Thru and
provide such list to the Company prior to the Closing Date. The Company shall
pay for the corrections prior to or as of the closing, subject to the dollar
limitations set forth in Section 3.22.
7.2.9 The Company shall have delivered to Purchaser the following
documents:
7.2.9.1 the New Affiliate Real Estate Leases and the Consents
to Transfer of the Shares and Estoppel Certificates required pursuant to Section
1.2.8;
7.2.9.2 to the extent available, a fully executed original
counterpart of each Nonaffiliate Real Property Lease in the Company's
possession;
21
<PAGE>
7.2.9.3 certificates dated no earlier than thirty (30) days
prior to the Closing Date, from the Secretary of State for the State of North
Carolina as to the good standing of the Company; and
7.2.9.4 all other documents, instruments and agreements
required to be delivered by the Company to Purchaser pursuant to this Agreement.
7.2.10 The Company shall have provided to Purchaser copies of all
operating permits and licenses (collectively, the "Approvals") which are in the
Company's possession.
7.2.11 The Company shall have provided to Purchaser copies of all
documents with respect to any actions, suit or proceeding which has been brought
by or on behalf of the Company with respect to the Assets or the Business.
7.2.12 The Shareholders shall have executed, acknowledged and
delivered a Noncompetition Agreement (the "Noncompetition Agreement"), in
substantially the form attached hereto as Exhibit 7.2.12.
7.2.13 No later than thirty (30) days prior to Closing, Purchaser's
auditor shall have (i) reviewed the financial and accounting system of the
Company; (ii) reviewed and confirmed the Financial Statements and results set
forth in the Financial Statements; and (iii) found no material objection to the
financial and accounting system of the Company, or the Company and Purchaser
shall have resolved any objection raised by the auditor and presented to the
Company by Purchaser.
7.2.14 The Board of Directors of AmeriKing, Inc. shall have approved
this Agreement and the transactions contemplated herein within 10 business days
of the date of this Agreement.
7.2.15 Purchaser shall have fifteen days after receipt of the
Exhibits to be furnished by the Company pursuant to Section 5.1.13 to review and
approve, at its reasonable discretion, the information presented thereon. In the
event Purchaser determines that the Exhibits are unacceptable, Purchaser shall
provide the Company with written notice of such defects and Company shall have
ten (10) days in which to cure such defects prior to Purchaser exercising its
right to terminate the Agreement.
7.2.16 Purchaser shall have reviewed and determined to its sole
satisfaction that all insurance policies and programs and employee benefit
programs of the Company (including, but not limited to, workmen's compensation
insurance) may be canceled as of the Closing Date without the payment of any
additional premium thereon or penalty associated therewith.
7.3 Contemporaneous Transfer. All transfers, assignments, conveyances,
and transactions under this Agreement shall be effected contemporaneously for
present value between and among the Company, the Shareholder and Purchaser.
22
<PAGE>
ARTICLE VIII -- INDEMNIFICATION
8.1 Indemnification by the Company and the Shareholders. The Company and
the Shareholders, jointly and severally, prior to the Closing, and the
Shareholders, jointly and severally, after the Closing, shall defend, indemnify
and hold harmless Purchaser (and, following Closing, the Company), its/their
respective officers, directors, stockholders, agents, servants and employees and
their respective heirs, personal and legal representatives, guardians,
successors and assigns, from and against any and all claims, threats,
liabilities, taxes, interest, fines, penalties, suits, actions, proceedings,
demands, damages, losses, costs and expenses (including reasonable attorneys'
and experts' fees and court costs) of every kind and nature arising out of,
resulting from, or in connection with the following:
8.1.1 Any material misrepresentation or breach by the Shareholders
or, prior to the Closing, the Company of any representation or warranty
contained in this Agreement.
8.1.2 Any material nonperformance, failure to comply or breach by
the Shareholders or, prior to the Closing, the Company of any covenant, promise
or agreement of the Shareholders or the Company contained in this Agreement.
8.1.3 Any debts, obligations, duties and liabilities of the Company
and/or the Shareholders that have not been reflected in the Purchase Price and
are satisfied by the Company and/or the Purchaser after the Closing.
8.1.4 The failure of the Company or the Shareholders to comply with
any applicable Environmental Laws (as hereinafter defined) or the presence of
Hazardous Materials (as hereinafter defined) in the soil or ground water on the
former or present properties of the Company at the time of Closing.
For purposes of this Section 8.1, the following terms shall have the
meaning set forth below:
(i) "Environmental Law" shall mean any and all laws, statutes,
ordinances, rules, regulations, judgments, orders, decrees, permits,
concessions, grants, agreements, licenses, or other governmental restrictions or
requirements regulating Hazardous Materials or relating to health, safety, the
environment or the release of Hazardous Materials into the environment, now or
hereafter in effect.
(ii) "Hazardous Materials" shall mean any chemical, substance,
material, object, condition, waste or combination thereof which is or may be
hazardous to human health or safety due to its radioactivity, ignitability,
corrosivity, reactivity, explosiveness, toxicity, carcinogenicity,
infectiousness or other harmful or potentially harmful properties or effects,
including, without limitation, all of those chemicals, substances, materials,
objects, conditions, wastes or combinations thereof which are now or become
listed, defined or regulated in any manner by any Environmental Law.
23
<PAGE>
8.2 Indemnification by Purchaser. Purchaser shall defend, indemnify and
hold harmless the Company the Shareholders and their respective heirs, personal
and legal representatives, guardians, successors and assigns, from and against
any and all claims, threats, liabilities, taxes, interest, fines, penalties,
suits, actions, proceedings, demands, damages, losses, costs and expenses
(including reasonable attorneys' and experts' fees and court costs) of every
kind and nature arising out of, resulting from, or in connection with the
following:
8.2.1 Any material misrepresentation, omission or breach by
Purchaser of any representation or warranty contained in this Agreement.
8.2.2 Any material nonperformance, failure to comply or breach by
Purchaser of any covenant, promise or agreement of Purchaser contained in this
Agreement.
8.3 Defense of Claims. In the event of any claim, threat, liability, tax,
interest, fine, penalty, suit, action, proceeding, demand, damage, loss, cost or
expense with respect to which indemnity is or may be sought hereunder (an
"Indemnity Claim"), the indemnified party shall promptly notify the indemnifying
party in writing of such Indemnity Claim, specifying in reasonable detail the
Indemnity Claim and the circumstances under which it arose. The indemnifying
party may elect to assume the defense of such Indemnity Claim, at its own
expense, by written notice to the indemnified party given within 10 days after
the indemnifying party receives written notice of the Indemnity Claim, and the
indemnifying party shall promptly engage counsel reasonably acceptable to the
indemnified party to direct and conduct such defense; provided, however, that
the indemnified party shall have the right to engage its own counsel, at its own
expense, to participate in such defense. In the event the indemnifying party
does not so elect to assume the defense of such Indemnity Claim in the manner
specified above, or if, in the reasonable opinion of counsel to the indemnified
party, there are defenses available to the indemnified party which are different
from or additional to those available to the indemnifying party or which give
rise to a material conflict between the defense of the indemnified party and of
the indemnifying party, then upon notice to the indemnifying party, the
indemnified party may elect to engage separate counsel to conduct its defense,
at the expense of the indemnified party.
In the event the indemnifying party assumes the defense of any Indemnity
Claim, it may at any time notify the indemnified party of its intention to
settle, compromise or satisfy such Indemnity Claim and may make such settlement,
compromise or satisfaction (at its own expense) unless within 20 days after the
giving of such written notice the indemnified party shall give written notice to
the indemnifying party of its intention to assume the defense of the Indemnity
Claim, in which event the indemnifying party shall be relieved of its duty
hereunder to indemnify the indemnified party. Unless the indemnified party shall
have given the notice referred to in the preceding sentence, (i) the indemnified
party shall not consent to or make any settlement, compromise or satisfaction
with respect to the Indemnity Claim without the prior written consent of the
indemnifying party, which consent shall not be unreasonably withheld, and (ii)
any settlement, compromise or satisfaction made by the indemnifying party with
respect to such Indemnity Claim shall be deemed to have been consented to by and
shall be binding upon the indemnified party.
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<PAGE>
8.4 Arbitration. Any dispute arising out of or relating to this Agreement
which occurs after the date of Closing, which has not been resolved by
non-binding means within thirty (30) days, shall be finally settled by
arbitration conducted in accordance with the American Arbitration Association
Commercial Arbitration Rules by a sole arbitrator selected by the parties. In
the event the parties cannot agree upon an arbitrator, each party shall select
an arbitrator and the two arbitrators so selected shall select the arbitrator to
hear the dispute. The place for arbitration shall be Westchester, Illinois.
ARTICLE IX -- MISCELLANEOUS
9.1 Survival of Representations, Warranties and Agreements. Except for
those obligations of the Company and the Shareholders described in paragraphs
1.8, 8.1.3 and 8.1.4 which shall survive the Closing in perpetuity, all of the
representations, warranties, covenants, promises and agreements of the parties
contained in this Agreement (or in any document delivered or to be delivered
pursuant to this Agreement or at or in connection with the Closing) shall
survive the execution, acknowledgment and delivery of this Agreement and the
consummation of the transactions contemplated hereby for a period of three (3)
years from the date of Closing.
9.2 Notices. All notices, requests, demands, consents, and other
communications which are required or may be given under this Agreement
(collectively, the "Notices") shall be in writing and shall be given either (a)
by personal delivery with a receipted copy of such delivery, (b) by certified or
registered United States mail, return receipt requested, postage prepaid, or (c)
by facsimile transmission with an original mailed by first class mail, postage
prepaid, to the following addresses:
(i) If to the Company, to:
B & J Restaurants, Inc.
c/o James E. Green
454 Providence Road South
Weddington, NC 28173
Telefax No.: (704) 845-1710
and
c/o Robert D. Green
7917 Gray Byrum Road
Waxhaw, NC 28173
Telefax No.: (704) 843-5494
25
<PAGE>
with a copy to:
Mark B. Edwards, Esq.
Poyner & Spruill, L.L.P.
100 North Tryon Street
Charlotte, NC 28202-4010
Telefax No.: (704) 342-5264
(ii) If to the Shareholders, to:
James E. Green
454 Providence Road South
Weddington, NC 28173
Telefax No.: (704) 845-1710
Robert D. Green
7917 Gray Byrum Road
Waxhaw, NC 28173
Telefax No.: (704) 843-5494
(iii) If to Purchaser:
Lawrence E. Jaro, Chief Executive Officer
AmeriKing Corporation
2215 Enterprise Drive
Westchester, IL 60154
Telefax No.: (708) 947-2160
with copies to:
A. Richard Caputo
The Jordan Company
9 West 57th Street, Suite 4000
New York, New York 10019
Telefax No.: (212) 755-5263
and
Ernest J. Panasci, Esq.
Slivka Robinson Waters & O'Dorisio, P.C.
1099 18th Street, Suite 2600
Denver, CO 80202
Telefax No.: (303) 297-2750
26
<PAGE>
or to such other address of which written notice in accordance with this Section
9.2 shall have been provided to the other parties. Notices may only be given in
the manner hereinabove described in this Section 9.2 and shall be deemed
received three (3) days after given in such manner; provided however, that any
notice sent by facsimile shall be deemed to have been given as of the date of
the transmission.
9.3 Entire Agreement. This Agreement (including the Exhibits hereto,
which constitute a part hereof as though set forth in full herein) constitutes
the full, entire and integrated agreement between the parties hereto with
respect to the subject matter hereof, and supersedes all prior negotiations,
correspondence, understandings and agreements among the parties hereto
respecting the subject matter hereof.
9.4 Assignability. This Agreement shall not be assignable by any party
hereto without the prior written consent of the other parties hereto, and any
attempted assignment in violation of this Section 9.4 shall be void and of no
effect. Notwithstanding the foregoing, however, Purchaser may assign the
Agreement to another subsidiary or affiliate of Purchaser, at its discretion.
9.5 Binding Effect; Benefit. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, personal and
legal representatives, guardians, successors and permitted assigns. Nothing in
this Agreement, express or implied, is intended to confer upon any other person
any rights, remedies, obligations, or liabilities.
9.6 Severability. Any provision of this Agreement which is held by a
court of competent jurisdiction to be prohibited or unenforceable only shall be
ineffective only to the extent of such prohibition or unenforceability, without
invalidating or rendering unenforceable the remaining provisions of this
Agreement.
9.7 Amendment; Waiver. No provision of this Agreement may be amended,
waived or otherwise modified without the prior written consent of all of the
parties hereto. No action taken pursuant to this Agreement, including any
investigation by or on behalf of any party shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, covenant or agreement herein contained. The waiver by any party
hereto of a breach of any provision or condition contained in this Agreement
shall not operate or be construed as a waiver of any subsequent breach or of any
other conditions hereof.
9.8 Section Headings. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
9.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
9.10 Applicable Law. This Agreement shall be governed by, construed,
interpreted and enforced in accordance with the laws of the State of Illinois.
27
<PAGE>
9.11 Remedies. The parties hereto acknowledge that in the event of a
breach of this Agreement, any claim for monetary damages hereunder may not
constitute an adequate remedy, and that it may therefore be necessary for the
protection of the parties to carry out the terms of this Agreement to apply for
the specific performance of the provisions hereof. It is accordingly hereby
agreed by all parties that no objection to the form of the action or the relief
prayed for in any proceeding for specific performance of this Agreement shall be
raised by any party, in order that such relief may be expeditiously obtained by
an aggrieved party. All parties may proceed to protect and enforce their rights
hereunder by a suit in equity, transaction at law or other appropriate
proceeding, whether for specific performance or for an injunction against a
violation of the terms hereof or in aid of the exercise of any right, power or
remedy granted hereunder or by law, equity or statute or otherwise. No course
of dealing and no delay on the part of any party hereto in exercising any right,
power or remedy shall operate as a waiver thereof or otherwise prejudice its
rights, powers or remedies, and no right, power or remedy conferred hereby shall
be exclusive of any other right, power or remedy referred to herein or now or
hereafter available at law, in equity, by statute or otherwise.
9.12 Further Assurances. The Company and the Shareholder jointly and
severally agree to execute, acknowledge and deliver, after the date hereof,
without additional consideration, such further assurances, instruments and
documents, and to take such further actions, as Purchaser may reasonably request
in order to fulfill the intent of this Agreement and the transactions
contemplated hereby.
9.13 Use of Genders. Whenever used in this Agreement, the singular shall
include the plural and vice versa, and the use of any gender shall include all
genders and the neuter.
9.14 Risk of Loss. All risk of loss of damage to or destruction of the
Assets, in whole or in part, shall be and remain with the Company until the
Closing and all of the transactions contemplated hereby shall have been
consummated.
9.15 Negotiations with Other Persons. Until the earlier of the Closing or
the termination of this Agreement as provided herein, neither the Company nor
the Shareholder shall initiate, encourage the initiation by others, or
participate in any discussion or negotiations with any other person or entity
relating to the sale of any or all of the Assets, the business of the Company or
any securities of the Company. From the date of this Agreement and until after
the Closing and the consummation of the transactions contemplated by this
Agreement, the Shareholders shall not offer for sale, sell or otherwise transfer
(with or without consideration) any securities of the Company owned of record or
beneficially by them.
9.16 Public Announcements. The Company, on the one hand, and the
Purchaser, on the other hand, will consult with each other before issuing, and
provide each other the opportunity to review and comment upon, any press release
or other public statements with respect to the transactions contemplated by this
Agreement, and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by applicable
law.
28
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9.17 Final Tax Return. The Shareholders agree to cause the Company to
file a final tax return (the "Company Final Tax Return") to be filed for the
short taxable year from January 1, 1997 through the Closing Date. The Company
Final Tax Return shall be filed on a timely basis and the filing thereof shall
be the sole responsibility of the Shareholders. The Shareholders shall bear the
cost of the preparation and filing of the Company Final Tax Return. The
Purchaser covenants to cause the Company to cooperate with the Shareholders in
obtaining from the Company after the Closing Date the information necessary to
enable the Shareholders to prepare the Company Final Tax Return.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement, with the intention of making it a valid and binding instrument, on
the date first above written.
Company:
ATTEST: B & J RESTAURANTS, INC.
________________________________ By:_______________________________
_____________, President
WITNESS: Shareholders:
________________________________ __________________________________
James E. Green
________________________________ __________________________________
Robert D. Green
Purchaser:
NATIONAL RESTAURANT
ENTERPRISES, INC. d/b/a
ATTEST: AMERIKING CORPORATION
__________________________ By:_______________________________
Lawrence E. Jaro, Chief Executive Officer
29
<PAGE>
EXHIBIT LIST
1 Restaurant Locations
1.2 Excluded Assets
1.2.1 Equipment, Furniture, Materials and Supplies
1.2.2 Fixed Assets
1.2.4 Franchise Agreements
1.2.7 (a) Nonaffiliate Real Property Leases
(b) Form of New Affiliate Real Property Leases
(c) Schedule of Base Rents for New Affiliate Real Property Leases
(d) Form of Consent to Transfer
(e) Form of Estoppel Certificate
1.9 Form of Escrow Agreement
3.2 Jurisdictions in which Qualified as a Foreign Corporation
3.8 Financial Statements
Unaudited Balance Sheet as of December 31, 1994
Unaudited Balance Sheet as of December 31, 1995
Audited Balance Sheets as of December 31, 1996
Unaudited Balance Sheet as of April 30, 1997
Unaudited Statements of Operations, Stockholders' Equity and Cash
Flows for the period January 1, 1994 through December 31, 1994
Unaudited Statements of Operations, Stockholders' Equity and Cash
Flows for the period January 1, 1995 through December 31,1995
Audited Statements of Operations, Stockholders' Equity and Cash Flows
for the period January 1, 1996 through December 31,1996
Unaudited Statements of Operations, Stockholders' Equity and Cash
Flows for the period January 1, 1997 through April 30, 1997
3.9 Tax Matters Exceptions
3.13 Employment Matters
3.14 Employee Relations Disclosure
3.15 Disclosure of Certain Changes or Events
3.16 Adverse Conditions
3.17 List of Contracts, Licenses and Agreements involving liabilities of
more than $5000
3.23 Insurance Policies
4.5 Defaults under the Burger King Franchise Agreements
6.1.4 Legal Proceedings
7.2.12 Form of Noncompetition Agreement
30
<PAGE>
Exhibit 10.54
- --------------------------------------------------------------------------------
THIRD AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
dated as of June 17, 1997
among
NATIONAL RESTAURANT ENTERPRISES, INC.,
AMERIKING, INC.
and
BANKBOSTON, N.A.
and those other lending institutions listed on Schedule 1 hereto
-------- -
and
BANKBOSTON, N.A., as Agent
with
BANCBOSTON SECURITIES INC.,
acting as Arranger
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. DEFINITIONS AND RULES OF INTERPRETATION..................................1
1.1. Definitions.......................................................1
1.2. Rules of Interpretation...........................................27
2. THE REVOLVING CREDIT FACILITY............................................27
2.1. Commitment to Lend................................................27
2.1.1. Commitment to Lend........................................27
2.1.2. Increase of the Commitments...............................28
2.2. Commitment Fee....................................................29
2.3. Reduction of Total Commitment.....................................29
2.4. The Revolving Credit Notes........................................30
2.5. Interest on Revolving Credit Loans................................30
2.6. Requests for Revolving Credit Loans...............................30
2.7. Conversion Options................................................31
2.7.1. Conversion to Different Type of Revolving Credit Loan.....31
2.7.2. Continuation of Type of Revolving Credit Loan.............32
2.7.3. Eurodollar Rate Loans.....................................32
2.8. Funds for Revolving Credit Loan...................................32
2.8.1. Funding Procedures........................................32
2.8.2. Advances by Agent.........................................33
3. REPAYMENT OF THE REVOLVING CREDIT LOANS..................................33
3.1. Maturity..........................................................33
3.2. Mandatory Repayments of Revolving Credit Loans....................33
3.3. Optional Repayments of Revolving Credit Loans.....................34
4. LETTERS OF CREDIT........................................................34
4.1. Letter of Credit Commitments......................................34
4.1.1. Commitment to Issue Letters of Credit.....................34
4.1.2. Letter of Credit Applications.............................35
4.1.3. Terms of Letters of Credit................................35
4.1.4. Reimbursement Obligations of Banks........................35
4.1.5. Participations of Banks...................................35
4.2. Reimbursement Obligation of the Borrower..........................35
4.3. Letter of Credit Payments.........................................36
4.4. Obligations Absolute..............................................36
4.5. Reliance by Issuer................................................37
4.6. Letter of Credit Fee..............................................37
5. CERTAIN GENERAL PROVISIONS...............................................38
5.1. Closing Fee.......................................................38
5.2. Agent's Fee.......................................................38
5.3. Funds for Payments................................................38
</TABLE>
<PAGE>
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<TABLE>
<S> <C> <C>
5.3.1. Payments to Agent.........................................38
5.3.2. No Offset, etc............................................38
5.4. Computations.......................................................38
5.5. Inability to Determine Eurodollar Rate.............................39
5.6. Illegality.........................................................39
5.7. Additional Costs, etc..............................................39
5.8. Capital Adequacy...................................................41
5.9. Certificate........................................................42
5.10. Indemnity.........................................................42
5.11. Interest on Overdue Amounts.......................................42
5.12. Replacement Banks.................................................43
6. COLLATERAL SECURITY AND GUARANTEES........................................43
6.1. Security of Borrower and Subsidiaries; Guaranty of Subsidiaries....43
6.2. Guaranties and Security of Holdings................................44
7. REPRESENTATIONS AND WARRANTIES............................................44
7.1. Corporate Authority................................................44
7.1.1. Incorporation; Good Standing..............................44
7.1.2. Authorization.............................................44
7.1.3. Enforceability............................................45
7.2. Governmental Approvals.............................................45
7.3. Title to Properties; Leases........................................45
7.4. Financial Statements and Projections...............................45
7.4.1. Financial Statements......................................45
7.4.2. Projections...............................................46
7.5. No Material Changes, etc...........................................46
7.6. Franchises, Patents, Copyrights, etc...............................46
7.7. Litigation.........................................................46
7.8. No Materially Adverse Contracts, etc...............................47
7.9. Compliance with Other Instruments, Laws, etc.......................47
7.10. Tax Status........................................................47
7.11. No Event of Default...............................................47
7.12. Holding Company and Investment Company Acts.......................47
7.13. Absence of Financing Statements, etc..............................47
7.14. Perfection of Security Interest...................................48
7.15. Certain Transactions..............................................48
7.16. Employee Benefit Plans............................................48
7.16.1. In General...............................................48
7.16.2. Terminability of Welfare Plans...........................48
7.16.3. Guaranteed Pension Plans.................................48
7.16.4. Multiemployer Plans......................................49
7.17. Regulations G, U and X............................................49
7.18. Environmental Compliance..........................................49
7.19. Subsidiaries, etc.................................................51
</TABLE>
<PAGE>
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<TABLE>
<S> <C>
7.20. Chief Executive Offices...........................................51
7.21. Fiscal Year.......................................................51
7.22. No Amendments to Certain Documents................................51
7.23. Disclosure........................................................52
7.24. Insurance.........................................................52
8. AFFIRMATIVE COVENANTS OF THE BORROWER.....................................52
8.1. Punctual Payment...................................................52
8.2. Maintenance of Office..............................................52
8.3. Records and Accounts...............................................52
8.4. Financial Statements, Certificates and Information.................53
8.5. Notices............................................................55
8.5.1. Defaults..................................................55
8.5.2. Environmental Events......................................55
8.5.3. Notification of Claim against Collateral..................55
8.5.4. Notice of Litigation and Judgments........................55
8.6. Corporate Existence; Maintenance of Properties.....................56
8.7. Insurance..........................................................56
8.8. Taxes..............................................................56
8.9. Inspection of Properties and Books, etc............................57
8.9.1. General...................................................57
8.9.2. Communications with Accountants...........................57
8.9.3. Environmental Assessments.................................57
8.10. Compliance with Laws, Contracts, Licenses, and Permits............58
8.11. Employee Benefit Plans............................................58
8.12. Use of Proceeds...................................................59
8.13. Fair Labor Standards Act..........................................59
8.14. Further Assurances................................................59
8.15. Mortgaged Property................................................59
8.16. Class of Stock....................................................60
8.17. Guarantees of AmeriKing Tennessee and AmeriKing Colorado..........60
9. CERTAIN NEGATIVE COVENANTS OF THE BORROWER................................60
9.1. Restrictions on Indebtedness.......................................60
9.2. Restrictions on Liens..............................................63
9.3. Restrictions on Investments........................................64
9.4. Distributions......................................................65
9.5. Merger, Consolidation and Disposition of Assets....................66
9.5.1. Mergers and Acquisitions..................................66
9.5.2. Disposition of Assets.....................................67
9.6. Sale and Leaseback.................................................68
9.7. Compliance with Environmental Laws.................................68
9.8. Subordinated Debt and Preferred Stock..............................69
9.9. Employee Benefit Plans.............................................69
</TABLE>
<PAGE>
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<TABLE>
<S> <C> <C>
9.10. Change in Terms of Capital Stock..................................70
9.11. Fiscal Year.......................................................70
9.12. Business Activities...............................................70
9.13. Modification of Documents.........................................71
9.14. Negative Pledges..................................................71
9.15. Transactions with Affiliates......................................71
9.16. Upstream Limitations..............................................71
9.17. Inconsistent Agreements...........................................71
9.18. Acquisition and Development Restrictions..........................72
10. FINANCIAL COVENANTS OF THE BORROWER......................................72
10.1. Debt Service Coverage Ratio.......................................72
10.2. Interest Coverage Ratio...........................................72
10.3. Leverage Ratio....................................................72
11. CLOSING CONDITIONS.......................................................73
11.1. Loan Documents etc................................................73
11.1.1. Loan Documents...........................................73
11.1.2. AmeriKing NC Acquisition Documents.......................73
11.2. Certified Copies of Charter Documents.............................73
11.3. Corporate Action..................................................73
11.4. Incumbency Certificate............................................73
11.5. Validity of Liens.................................................73
11.6. Perfection Certificates and UCC Search Results....................74
11.7. Certificates of Insurance.........................................74
11.8. Solvency Certificate..............................................74
11.9. Opinion of Counsel................................................74
11.10. Payment of Fees and other Arrangements............................74
11.11. Disbursement Instructions.........................................74
11.12. Satisfaction of Conditions of AmeriKing NC Acquisition Documents..74
11.13. Completion of Acquisition.........................................74
11.14. Completion of Successful Financial Inquiry........................74
11.15. Taxes.............................................................75
11.16. Title Insurance...................................................75
11.17. Landlord Consents.................................................75
11.18. Consents and Approvals............................................75
11.19. Allocation Adjustments............................................75
11.20. Dissolution of AmeriKing NC.......................................75
12. CONDITIONS TO ALL BORROWINGS.............................................75
12.1. Representations True; No Event of Default.........................75
12.2. No Legal Impediment...............................................76
12.3. Governmental Regulation...........................................76
12.4. Proceedings and Documents.........................................76
12.5. Conditions to Advances of Revolving Credit Loans for Acquisitions.76
</TABLE>
<PAGE>
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<TABLE>
<S> <C> <C>
12.5.1. Acquisition Documents....................................76
12.5.2. Pro Forma Compliance.....................................76
12.5.3. Use of Proceeds..........................................76
13. EVENTS OF DEFAULT; ACCELERATION; ETC.....................................76
13.1. Events of Default and Acceleration................................76
13.2. Termination of Commitments........................................80
13.3. Remedies..........................................................80
13.4. Distribution of Collateral Proceeds...............................80
14. SETOFF...................................................................81
15. THE AGENT................................................................82
15.1. Authorization.....................................................82
15.2. Employees and Agents..............................................82
15.3. No Liability......................................................82
15.4. No Representations................................................82
15.5. Payments..........................................................83
15.5.1. Payments to Agent........................................83
15.5.2. Distribution by Agent....................................83
15.5.3. Delinquent Banks.........................................83
15.6. Holders of Revolving Credit Notes.................................84
15.7. Indemnity.........................................................84
15.8. Agent as Bank.....................................................84
15.9. Resignation.......................................................84
15.10. Notification of Defaults and Events of Default...................85
15.11. Duties in the Case of Enforcement................................85
16. EXPENSES.................................................................85
17. INDEMNIFICATION..........................................................86
18. SURVIVAL OF COVENANTS, ETC...............................................86
19. ASSIGNMENT AND PARTICIPATION.............................................87
19.1. Conditions to Assignment by Banks................................87
19.2. Certain Representations and Warranties; Limitations; Covenants...87
19.3. Register.........................................................88
19.4. New Revolving Credit Notes.......................................89
19.5. Participations...................................................89
19.6. Disclosure.......................................................89
19.7. Assignee or Participant Affiliated with the Borrower.............90
19.8. Miscellaneous Assignment Provisions..............................90
19.9. Assignment by Borrower...........................................90
20. NOTICES, ETC.............................................................90
21. GOVERNING LAW............................................................91
22. HEADINGS.................................................................91
23. COUNTERPARTS.............................................................92
24. ENTIRE AGREEMENT, ETC....................................................92
25. WAIVER OF JURY TRIAL.....................................................92
</TABLE>
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<TABLE>
<S> <C>
26. CONSENTS, AMENDMENTS, WAIVERS, ETC.......................................92
27. SEVERABILITY.............................................................93
28. TRANSITIONAL ARRANGEMENTS................................................93
28.1. Original Credit Agreement Superseded..............................93
28.2. Return and Cancellation of Revolving Credit Notes.................93
28.3. Interest and Fees Under Superseded Agreement......................93
</TABLE>
<PAGE>
EXHIBITS
--------
Exhibit A Form of Revolving Credit Note
Exhibit B Form of Revolving Credit Loan Request
Exhibit C Form of Commitment Increase Request
Exhibit D Form of Compliance Certificate
Exhibit E-1 Form of Guaranty (Cincinnati, Virginia)
Exhibit E-2 Form of Guaranty (Illinois)
Exhibit F-1 Form of Security Agreement (Borrower)
Exhibit F-2 Form of Security Agreement (Subsidiaries)
Exhibit F-3 Form of Security Agreement (AmeriKing Illinois)
Exhibit G Form of Stock Pledge Agreement
Exhibit H Form of Assignment and Acceptance
Exhibit I Form of Mortgage
Exhibit J Exemption Certificate
SCHEDULES
---------
Schedule 1 Commitments
Schedule 1A Mortgaged Properties
Schedule 7.3 Title to Properties; Leases
Schedule 7.7 Litigation
Schedule 7.15 Transactions with Affiliates
Schedule 7.18 Environmental Matters
Schedule 7.19 Subsidiaries
Schedule 7.20 Chief Executive Offices of Subsidiaries
Schedule 7.21 Fiscal Years
Schedule 7.24 Insurance
Schedule 9.1 Permitted Indebtedness
Schedule 9.2 Permitted Liens
Schedule 9.3 Permitted Investments
Schedule 9.6 Sale and Leaseback Transactions
Schedule 9.7 Environmental Compliance
<PAGE>
THIRD AMENDED AND RESTATED
--------------------------
REVOLVING CREDIT AGREEMENT
--------------------------
This THIRD AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT is made as of
June 17, 1997, by and among AMERIKING, INC. ("Holdings"), a Delaware
corporation, NATIONAL RESTAURANT ENTERPRISES, INC. (the "Borrower"), a Delaware
corporation having its principal place of business at 2215 Enterprise Drive,
Suite 1502, Westchester, Illinois 60154 and BANKBOSTON, N.A. (f/k/a The First
National Bank of Boston), a national banking association and the other lending
institutions listed on Schedule 1 and BANKBOSTON, N.A. (f/k/a The First National
Bank of Boston) as agent for itself and such other lending institutions.
WHEREAS, pursuant to a Second Amended and Restated Revolving Credit and
Term Loan Agreement dated as of February 7, 1996 (as amended from time to time,
the "Original Credit Agreement"), by and among Holdings, the Borrower, certain
of the Banks (as hereinafter defined) and the Agent (as hereinafter defined),
the Banks party thereto made term loans to the Borrower for the purpose of
financing certain acquisitions and made available revolving credit loans to
finance certain acquisitions and for general corporate and working capital
purposes; and
WHEREAS, the Borrower has requested, among other things, to amend and
restate the Original Credit Agreement and to provide additional financing, to
refinance certain Indebtedness (as hereinafter defined), to finance acquisitions
and development of BKC Restaurants (as hereinafter defined) in the future, and
for working capital and general corporate purposes, and the Banks are willing to
amend and restate the Original Credit Agreement and to provide such additional
financing on the terms and conditions set forth herein;
NOW, THEREFORE, Holdings, the Borrower, the Banks and the Agent agree that
on the Closing Date the Original Credit Agreement is hereby amended and restated
in its entirety and shall remain in full force and effect only as set forth
herein.
1. DEFINITIONS AND RULES OF INTERPRETATION.
----------------------------------------
1.1. Definitions. The following terms shall have the meanings set forth in
this (S)1 or elsewhere in the provisions of this Credit Agreement referred to
below:
Adjustment Date. The first day of the month immediately following the
month in which a Compliance Certificate is to be delivered by the Borrower
pursuant to (S)8.4(d).
Affected Bank. See (S)5.12 hereof.
Affiliate. Any Person that would be considered to be an affiliate of the
Borrower under Rule 144(a) of the Rules and Regulations of the Securities and
Exchange
<PAGE>
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Commission, as in effect on the date hereof, if the Borrower was issuing
securities; provided, however, that the term "Affiliate" as it applies to
Holdings and its Subsidiaries shall not include MCIT PLC.
Agent's Head Office. The Agent's head office located at 100 Federal
Street, Boston, Massachusetts 02110, or at such other location as the Agent may
designate from time to time.
Agent. BankBoston, N.A. (f/k/a The First National Bank of Boston) acting
as agent for the Banks.
Agent's Fee. See (S)5.2 hereof.
Agent's Special Counsel. Bingham, Dana & Gould LLP or such other counsel
as may be approved by the Agent.
AmeriKing Cincinnati. AmeriKing Cincinnati Corporation I, a Delaware
corporation and wholly-owned Subsidiary of the Borrower.
AmeriKing Cincinnati Acquisition. The transaction in which AmeriKing
Cincinnati purchased certain of the assets and business of (a) Houston, Inc.
consisting of two (2) restaurants pursuant to the AmeriKing Cincinnati/Houston
Asset Purchase Agreement on February 7, 1996; (b) Fifth & Race, Inc. consisting
of one (1) restaurant pursuant to the AmeriKing Cincinnati/FRI Asset Purchase
Agreement on February 7, 1996; and (c) Thirty-Forty, Inc. consisting of nine (9)
restaurants pursuant to the AmeriKing Cincinnati/TFI Asset Purchase Agreement on
February 7, 1996.
AmeriKing Cincinnati/FRI Asset Purchase Agreement. The Asset Purchase
Agreement dated as of November 6, 1995 by and among Fifth & Race, Inc., James P.
Borke, W. Curtis Smith, William T. Keller and AmeriKing Cincinnati as amended by
Amendment No. 1 dated as of February 7, 1996.
AmeriKing Cincinnati/Houston Asset Purchase Agreement. The Asset Purchase
Agreement dated as of November 6, 1995 by and among Houston, Inc., James P.
Borke, W. Curtis Smith, William T. Keller, the Borrower and AmeriKing Cincinnati
as amended by Amendment No. 1 dated as of February 7, 1996.
AmeriKing Cincinnati/TFI Asset Purchase Agreement. The Asset Purchase
Agreement dated as of November 6, 1995 by and among Thirty-Forty, Inc., James P.
Borke, W. Curtis Smith and AmeriKing Cincinnati as amended by Amendment No. 1
dated as of February 7, 1996.
AmeriKing Colorado. AmeriKing Colorado Corporation I, a Delaware
corporation and wholly-owned Subsidiary of the Borrower.
AmeriKing Colorado Acquisition. The transaction in which AmeriKing
Colorado purchased (a) certain of the assets and business of DMW, Inc.
consisting of three (3) restaurants pursuant to the AmeriKing/DMW Asset Purchase
Agreement on July 5, 1995 and (b) certain of the assets and business of WSG,
Inc. consisting of one (1)
<PAGE>
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restaurant pursuant to the AmeriKing/WSG Asset Purchase Agreement on July 5,
1995.
AmeriKing Colorado/DMW Asset Purchase Agreement. The Asset Purchase
Agreement dated as of July 5, 1995 by and among DMW, Inc., Daniel L. White and
AmeriKing Colorado.
AmeriKing Colorado/WSG Asset Purchase Agreement. The Asset Purchase
Agreement dated as of July 5, 1995 by and among WSG, Inc., Daniel L. White,
Susan J. Wakeman, George Alaniz, Jr. and AmeriKing Colorado.
AmeriKing Illinois. AmeriKing Illinois Corporation I, a Delaware
corporation and wholly-owned Subsidiary of the Borrower.
AmeriKing NC. AmeriKing Carolina Corporation I, a Delaware corporation
and, prior to its dissolution, a wholly-owned Subsidiary of the Borrower.
AmeriKing NC Acquisition. The transaction in which the Borrower shall have
purchased certain of the assets and business of the Carolina Sellers consisting
of twenty-six (26) restaurants pursuant to the AmeriKing NC Asset Purchase
Agreements on the AmeriKing NC Acquisition Closing Date.
AmeriKing NC Acquisition Closing Date. The first date on which the
conditions set forth in each of the AmeriKing NC Asset Purchase Agreements have
been satisfied and the AmeriKing NC Acquisition has occurred.
AmeriKing NC Acquisition Documents. Collectively, the AmeriKing NC Asset
Purchase Agreements and related bills of sale, instruments of assignment,
leases, Franchise Agreements and other documents, instruments and certificates
delivered in connection with any of the foregoing.
AmeriKing NC Asset Purchase Agreement. Collectively, (a) the Asset
Purchase Agreement dated as of March 7, 1997 among the Carolina Sellers and
AmeriKing NC, as amended by Amendment No. 1 to Asset Purchase Agreement dated as
of April 8, 1997 among the Carolina Sellers, AmeriKing NC and the Borrower
pursuant to which AmeriKing NC assigned all of its rights and obligations under
the Asset Purchase Agreement to the Borrower and the Borrower assumed all such
rights and obligations, as amended by Amendment No. 2 to Asset Purchase
Agreement dated as of June 16, 1997, as amended by Amendment No. 3 to Asset
Purchase Agreement dated as of June 16, 1997 and (b) the Asset Purchase
Agreement dated as of March 7, 1997 among North Foods, Inc., the Shareholders of
North Foods, Inc. and AmeriKing NC, as amended by Amendment No. 1 to Asset
Purchase Agreement dated as of April 8, 1997 pursuant to which AmeriKing NC
assigned all of its rights and obligations under the Asset Purchase Agreement to
Borrower and Borrower assumed all such rights and obligations, as amended by
Amendment No. 2 and Amendment No. 3 to Asset Purchase Agreement both dated as of
June 16, 1997.
AmeriKing Tennessee. AmeriKing Tennessee Corporation I, a Delaware
corporation and wholly-owned Subsidiary of the Borrower.
<PAGE>
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AmeriKing Tennessee Acquisition. The transaction in which AmeriKing
Tennessee purchased (a) the outstanding capital stock of QSC, Inc., whose assets
consist of, among other items, eight (8) restaurants pursuant to the BKC/QSC
Stock Purchase Agreement on November 21, 1995 and (b) the outstanding capital
stock of Ro-Lank, Inc., whose assets consist of, among other items, three (3)
restaurants pursuant to the BKC/Ro-Lank Stock Purchase Agreement on November 21,
1995.
AmeriKing Tennessee/BKC/QSC Stock Purchase Agreement. The Purchase
Agreement dated as of November 21, 1995 by and among Ronny D. Lankford, Robert
W. Lankford, Michael A. Reed and QSC, Inc., which Purchase Agreement was subject
to the BKC Assignment.
AmeriKing Tennessee/BKC/Ro-Lank Stock Purchase Agreement. The Purchase
Agreement dated as of November 21, 1995 by and among Ronny D. Lankford, Robert
W. Lankford and Ro-Lank, Inc., which Purchase Agreement was subject to the BKC
Assignment.
AmeriKing Tennessee Sellers. Collectively, Ronny D. Lankford, Robert W.
Lankford, Michael A. Reed, QSC, Inc. and Ro-Lank, Inc.
AmeriKing Virginia. AmeriKing Virginia Corporation I, a Delaware
Corporation and wholly-owned Subsidiary of the Borrower.
AmeriKing Virginia Acquisition. The transaction in which AmeriKing
Virginia purchased certain of the assets and business of the Virginia Sellers,
consisting of twenty-four (24) restaurants pursuant to the AmeriKing Virginia
Asset Purchase Agreement on February 7, 1996.
AmeriKing/Virginia Asset Purchase Agreement. The Asset Purchase Agreement
dated as of November 30, 1994 by and among the Virginia Sellers and AmeriKing
Virginia, as amended by Amendment No. 1 dated on as of February 7, 1996.
AmeriKing Virginia Sellers. C&N Dining, Inc. and its Affiliates (as
defined in the AmeriKing Virginia Asset Purchase Agreement).
Applicable Margin. For each period commencing on an Adjustment Date
through the date immediately preceding the next Adjustment Date (each a "Rate
Adjustment Period"), the Applicable Margin shall be the applicable margin set
forth below with respect to Holdings' Leverage Ratio, as determined for the
fiscal period of the Borrower and its Subsidiaries ending immediately prior to
the applicable Rate Adjustment Period.
<PAGE>
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Letter
Base Rate Eurodollar Rate Commitment of Credit
Leverage Ratio Loans Loans Fees Fees
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Greater than 4.50:1.00 1.00% 2.50% 0.500% 2.50%
- -------------------------------------------------------------------------------------------------------
Less than or equal to 0.750% 2.25% 0.375% 2.25%
4.50:1.00 but greater than
or equal to 3.50:1.00
- -------------------------------------------------------------------------------------------------------
Less than 3.50:1.00 0.500% 2.00% 0.250% 2.00%
- -------------------------------------------------------------------------------------------------------
</TABLE>
Notwithstanding the foregoing, (a) for Revolving Credit Loans outstanding,
the Letter of Credit Fees and the commitment fee payable during the period
commencing on the Closing Date through the date immediately preceding the first
Adjustment Date to occur after the fiscal quarter ending September 30, 1997, the
Applicable Margin shall be the highest Applicable Margin set forth above, and
(b) if the Borrower fails to deliver any Compliance Certificate pursuant to
(S)8.4(d) hereof then, for the period commencing on the next Adjustment Date to
occur subsequent to such failure through the date immediately following the date
on which such Compliance Certificate is delivered, the Applicable Margin shall
be the highest Applicable Margin set forth above.
Asset Purchase Agreement. The Asset Purchase Agreement dated as of
September 30, 1994 by and between BNB, Sheldon Friedman and the Borrower.
Assignment and Acceptance. See (S)19.1 hereof.
Balance Sheet Date. March 31, 1997.
Banks. BKB and the other lending institutions listed on Schedule 1 hereto
and any other Person who becomes an assignee of any rights and obligations of a
Bank pursuant to (S)19.
Base Rate. The annual rate of interest announced from time to time by BKB
at its head office in Boston, Massachusetts, as its "base rate".
Base Rate Loans. Revolving Credit Loans bearing interest calculated by
reference to the Base Rate.
BBI. BancBoston Investments Inc., a Massachusetts corporation.
BKB. BankBoston, N.A., a national banking association, in its individual
capacity.
BKC. Burger King Corporation, a Florida corporation.
BKC Assignment. The Assignment and Assumption Agreement dated as of
November 21, 1995 among BKC, the AmeriKing Tennessee Sellers and AmeriKing
<PAGE>
-6-
Tennessee, pursuant to which BKC assigned all of its rights and obligations
under the BKC/QSC Stock Purchase Agreement and the BKC/Ro-Lank Stock Purchase
Agreement to AmeriKing Tennessee.
BKC Restaurant. A quick service restaurant franchised by BKC that is
located in the United States, its territories, or Canada.
BNB. BNB Land Venture, Inc., an Illinois corporation.
Borrower. As defined in the preamble hereto.
Borrower Stock Pledge Agreements. Collectively, (a) the Stock Pledge
Agreement, dated as of December 21, 1995, between the Borrower and the Agent, as
amended by the Second Security Documents Amendment and the Third Security
Documents Amendment, and as the same may be further amended, restated,
supplemented or modified from time to time; (b) the Stock Pledge Agreement,
dated as of February 7, 1996, between the Borrower and the Agent, as amended by
the Third Security Documents Amendment and as the same may be amended, restated,
supplemented or modified from time to time; and (c) the Stock Pledge Agreement
dated as of December 3, 1996, between the Borrower and the Agent, as amended by
the Third Security Documents Amendment and as the same may be amended, restated,
supplemented or modified from time to time.
Business Day. Any day (other than Saturdays or Sundays) on which banking
institutions in Boston, Massachusetts and Chicago, Illinois are open for the
transaction of banking business and, in the case of Eurodollar Rate Loans, also
a day which is a Eurodollar Business Day.
Capital Assets. Fixed assets, both tangible (such as land, buildings,
fixtures, machinery and equipment) and intangible (such as patents, copyrights,
trademarks, franchises and good will); provided that Capital Assets shall not
include any item customarily charged directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with generally accepted
accounting principles.
Capital Expenditures. Amounts paid or indebtedness incurred by Holdings,
the Borrower or any of their Subsidiaries in connection with the purchase or
lease by Holdings, the Borrower or any of their Subsidiaries of Capital Assets
that would be required to be capitalized and shown on the balance sheet of such
Person in accordance with generally accepted accounting principles, provided,
however amounts paid or indebtedness incurred by the Borrower in connection with
Permitted Acquisitions, including without limitation, in connection with the
development of BKC Restaurants, shall not be included as Capital Expenditures.
Capitalized Leases. Leases under which Holdings, the Borrower or any of
their Subsidiaries is the lessee or obligor, the discounted future rental
payment obligations under which are required to be capitalized on the balance
sheet of the lessee or obligor in accordance with generally accepted accounting
principles, provided, however, for purposes of this Credit Agreement all real
estate leases (including the FFCA Leases) of BKC restaurants shall be considered
operating leases.
<PAGE>
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Capitalization Documents. The Subordination Documents, the Management
Subscription Agreement, the Investor Subscription Agreement, the Executive
Subscription Agreement, the Stockholders Agreement, the Certificate of
Designation and the certificates of incorporation of Holdings, the Borrower and
their Subsidiaries.
Carolina Sellers. Collectively, F& P Enterprises, Inc. and the shareholders
of F&P Enterprises, Inc. set forth on the AmeriKing NC Asset Purchase
Agreements.
Cash Equivalents. Collectively, (a) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof, (b)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable
from either Standard & Poor's Rating Group, a division of McGraw-Hill, Inc., a
New York corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's"),
(or, if at any time neither such rating service shall be rating such
obligations, then from such other nationally recognized rating services
acceptable to the Majority Banks), (c) commercial paper maturing in no more than
one year from the date of creation thereof and, at the time of acquisition,
having the highest rating obtainable from either S&P or Moody's (or, if at any
time neither such rating service shall be rating such obligations, then from
such other nationally recognized rating service acceptable to the Majority
Banks), (d) certificates of deposit (domestic or eurodollar), bankers'
acceptances, or time deposits maturing within one year from the date of
acquisition thereof issued by commercial banks organized under the laws of the
United States of America or any state thereof or the District of Columbia, each
having combined capital and surplus of not less than $500,000,000 ("Qualifying
Banks"), (e) repurchase agreements and reverse repurchase agreements with
Qualifying Banks, provided that the terms of such agreements comply with the
guidelines set forth in the Federal Financial Institutions Examination Council
Supervisory Policy -- Repurchase Agreements of Depository Institutions with
Securities Dealers and Others as adopted by the Comptroller of the Currency on
October 31, 1985 (the "Supervisory Policy"), and provided further that
possession or control of the underlying securities is established as provided in
the Supervisory Policy, (f) investments in money market funds or money market
deposit accounts that invest solely in Cash Equivalents described in clauses (a)
through (e) above and (g) any other Investment permitted under Section 9.3(a),
(b), (c) or (d) of the Credit Agreement (as in effect on the date hereof).
CERCLA. See (S)7.18 hereof.
Certificate of Designation. The Certificate of Designation of Holdings
dated as of December 3, 1996 and in form and substance satisfactory to the Agent
and the Banks.
Closing Date. The first date on which the conditions set forth in (S)11
have been satisfied, the Original Credit Agreement shall be amended and restated
as set forth herein, the existing Revolving Credit Loans and Letters of Credit
under the Original Credit Agreement are converted to Revolving Credit Loans or
Letters of Credit
<PAGE>
-8-
hereunder, as the case may be, and any Revolving Credit Loans are to be made or
any Letter of Credit is to be issued hereunder.
Code. The Internal Revenue Code of 1986.
Collateral. All of the property, rights and interests of Holdings, the
Borrower and their Subsidiaries that are or are intended to be subject to the
security interests created by the Security Documents.
Commitment. With respect to each Bank, the amount set forth on Schedule 1
hereto as the amount of such Bank's commitment to make Revolving Credit Loans
to, and to participate in the issuance, extension and renewal of Letters of
Credit for the account of, the Borrower, as the same may be increased pursuant
to (S)2.1 hereof and as the same may be reduced from time to time; or if such
commitment is terminated pursuant to the provisions hereof, zero.
Commitment Fee Rate. The applicable rate per annum set forth in the chart
contained in the definition of Applicable Margin under the heading "Commitment
Fee".
Commitment Increase Request. See (S)2.1.2.
Commitment Percentage. With respect to each Bank, the percentage set forth
on Schedule 1 hereto as such Bank's percentage of the aggregate Commitments of
all of the Banks.
Compliance Certificate. See (S)8.4(d) hereof.
Consolidated or consolidated. With reference to any term defined herein,
shall mean that term as applied to the accounts of Holdings and its Subsidiaries
or the Borrower and its Subsidiaries, as applicable, consolidated in accordance
with generally accepted accounting principles.
Consolidated Cash Flow. With respect to any fiscal period, an amount equal
to the sum of (a) Consolidated Net Income for such fiscal period, plus (b) in
each case, to the extent deducted in the calculation of such Person's
Consolidated Net Income and without duplication, (i) depreciation and
amortization for such period, plus (ii) other noncash charges made in
calculating Consolidated Net Income for such period, plus (iii) tax expense for
such period, plus (iv) Consolidated Total Interest Expense paid or accrued
during such period, plus (v) non-cash expenses relating to Financial Accounting
Standards Board Statements Nos. 106, 109 and 121 deducted in the calculation of
Consolidated Net Income for such period, plus (vi) the aggregate amount of non-
capitalized transaction costs incurred in connection with financings and
acquisitions, (including, but not limited to, financing and refinancing fees),
minus (c) Capital Expenditures made in such period, minus (d) cash taxes paid in
such period, all as determined on a consolidated basis in accordance with
generally accepted accounting principles.
Consolidated Net Income. For any period, the consolidated net income (or
net deficit) of any Person and its Subsidiaries, after deduction of all
expenses, taxes, and
<PAGE>
-9-
other proper charges, determined in accordance with generally accepted
accounting principles, after excluding therefrom (a) dividends paid or payable
to the extent deducted from Consolidated Net Income; (b) without duplication,
all nonrecurring nonoperating income or expenses, including but not limited to
gains or losses realized upon the termination of pension plans, upon the sale of
assets or the satisfaction of Indebtedness; and (c) nonrecurring cash
consolidation expenses of the Borrower and its Subsidiaries pertaining to the
AmeriKing NC Acquisition and all subsequent Permitted Acquisitions to the extent
such cash expenses (i) which, in the case of the AmeriKing NC Acquisitions and
all subsequent Permitted Acquisitions are greater than $250,000 but less than
$500,000 in any fiscal year, are approved by the Agent and (ii) which in the
case of the AmeriKing NC Acquisitions and all subsequent Permitted Acquisitions
are greater than $500,000 in any fiscal year, are approved by the Majority
Banks.
Consolidated Total Interest Expense. With respect to any Person, for any
fiscal period, the aggregate amount of interest expense in respect of all
Indebtedness (other than Indebtedness relating to Franchise Agreements,
licenses, leases or other agreements with BKC) of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with generally accepted accounting principles (including all non-cash interest
payments, the interest portion of any deferred payment obligation and the
interest component of Capitalized Leases, but excluding amortization of deferred
financing fees if such amortization would otherwise be included in interest
expense).
Conversion Request. A notice given by the Borrower to the Agent of the
Borrower's election to convert or continue a Revolving Credit Loan in accordance
with (S)2.7.
Credit Agreement. This Third Amended and Restated Revolving Credit
Agreement, including the Schedules and Exhibits hereto.
Debt Service Coverage Ratio. As at any date of determination and with
respect to Holdings and its Subsidiaries, the ratio of (a) the Consolidated Cash
Flow of Holdings and its Subsidiaries for the Reference Period then ended to (b)
the Total Debt Service of Holdings and its Subsidiaries for such Reference
Period.
Default. See (S)13.1 hereof.
Delinquent Bank. See (S)15.5.3 hereof.
Distribution. The declaration or payment of any dividend on or in respect
of any shares of any class of capital stock of a Person, other than dividends
payable solely in shares of common stock or Preferred Stock of such Person; the
purchase, redemption, or other retirement of any shares of any class of capital
stock of a Person, directly or indirectly through a Subsidiary of such Person or
otherwise; the return of capital by a Person to its shareholders as such; or any
other distribution on or in respect of any shares of any class of capital stock
of a Person.
Dollars or $. Dollars in lawful currency of the United States of America.
<PAGE>
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Domestic Lending Office. Initially, the office of each Bank designated as
such in Schedule 1 hereto; thereafter, such other office of such Bank, if any,
located within the United States that will be making or maintaining Base Rate
Loans.
Drawdown Date. The date on which any Revolving Credit Loan is made or is to
be made, and the date on which any Revolving Credit Loan is converted or
continued in accordance with (S)2.7.
Dual-Use Establishment. A single location at which more than one business
activity is conducted, but as to which the primary business is the conduct of a
BKC Restaurant.
EBITDA. With respect to any fiscal period, an amount equal to the sum of
(a) Consolidated Net Income for such fiscal period, plus (b) in each case to the
extent deducted in the calculation of such Person's Consolidated Net Income and
without duplication (i) depreciation and amortization for such period, plus (ii)
other noncash charges made in calculating Consolidated Net Income for such
period plus (iii) tax expense for such period, plus (iv) Consolidated Total
Interest Expense paid or accrued during such period, plus (v) non-cash expenses
relating to Financial Accounting Standards Board Statements Nos. 106, 109 and
121 deducted in the calculation of Consolidated Net Income for such period, plus
(vi) the aggregate amount of non-capitalized transaction costs incurred in
connection with financings and acquisitions, (including, but not limited to,
financing and refinancing fees), plus (vii) fees paid under the TJC Management
Agreement or the Intercompany Management Agreement, to the extent permitted
under (S)9.4(d), plus (viii) amortization of start up costs of new restaurants
developed by the Borrower and its Restricted Subsidiaries, all as determined in
accordance with generally accepted accounting principles.
Eligible Assignee. Any of (a) a commercial bank or finance company
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having total assets in excess of $1,000,000,000; (b) a
savings and loan association or savings bank organized under the laws of the
United States, or any State thereof or the District of Columbia, and having a
net worth of at least $100,000,000, calculated in accordance with generally
accepted accounting principles; (c) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having total assets in excess of $1,000,000,000, provided that such
bank is acting through a branch or agency located in the country in which it is
organized or another country which is also a member of the OECD; (d) the central
bank of any country which is a member of the OECD; (e) any investment company,
investment fund, financial institution or other institutional lender (other than
any financial institution which but for the amount of its total assets or net
worth would have been an Eligible Assignee under clauses (a) through (d) above)
having total assets in excess of $100,000,000 and (f) if, but only if, any Event
of Default has occurred and is continuing, any other bank, insurance company,
commercial finance company or other financial institution or other Person
approved by the Agent, such approval not to be unreasonably withheld.
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Employee Benefit Plan. Any employee benefit plan within the meaning of
(S)3(3) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate, other than a Multiemployer Plan.
Environmental Laws. See (S)7.18(a) hereof.
ERISA. The Employee Retirement Income Security Act of 1974.
ERISA Affiliate. Any Person which is treated as a single employer with the
Borrower under (S)414 of the Code.
ERISA Reportable Event. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of (S)4043 of ERISA and the regulations
promulgated thereunder as to which the requirement of notice has not been
waived.
Eurocurrency Reserve Rate. For any day with respect to a Eurodollar Rate
Loan, the maximum rate (expressed as a decimal) at which any lender subject
thereto would be required to maintain reserves under Regulation D of the Board
of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D), if such liabilities were
outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on
and as of the effective date of any change in the Eurocurrency Reserve Rate.
Eurodollar Business Day. Any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London or such
other eurodollar interbank market as may be selected by the Agent in its sole
discretion acting in good faith.
Eurodollar Lending Office. Initially, the office of each Bank designated as
such in Schedule 1 hereto; thereafter, such other office of such Bank, if any,
that shall be making or maintaining Eurodollar Rate Loans.
Eurodollar Rate. For any Interest Period with respect to a Eurodollar Rate
Loan, the rate of interest equal to (a) the rate per annum (rounded upwards to
the nearest 1/16 of one percent) at which the Reference Bank's Eurodollar
Lending Office is offered Dollar deposits two (2) Eurodollar Business Days prior
to the beginning of such Interest Period in the interbank eurodollar market
where the eurodollar and foreign currency and exchange operations of such
Eurodollar Lending Office are customarily conducted, for delivery on the first
day of such Interest Period for the number of days comprised therein and in an
amount comparable to the amount of the Eurodollar Rate Loan of such Reference
Bank to which such Interest Period applies, divided by (b) a number equal to
1.00 minus the Eurocurrency Reserve Rate, if applicable.
Eurodollar Rate Loans. Revolving Credit Loans bearing interest calculated
by reference to the Eurodollar Rate.
Event of Default. See (S)13.1 hereof.
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Exchange Debenture. The 10.75% Subordinated Exchange Debenture due 2008
which may be issued by Holdings pursuant to the Exchange Debenture Indenture.
Exchange Debenture Indenture. The Exchange Debenture Indenture dated as of
December 3, 1996 between Holdings and Fleet National Bank, as trustee, in form
and substance satisfactory to the Agent and the Banks.
Executive Subscription Agreement. The Executive and Advisor Subscription
Agreement, dated as of September 1, 1994, between Holdings and the parties
listed on the signature pages thereto.
Fee Letter. The fee letter dated or to be dated on or prior to the Closing
Date between the Borrower and the Agent, in form and substance satisfactory to
the Agent and the Banks.
FFCA. FFCA Acquisition Corporation, a Delaware corporation.
FFCA Agreement. The Sale-Leaseback Agreement dated as of February 7, 1996
by and among FFCA, AmeriKing Virginia and AmeriKing Tennessee, and in
substantially the form delivered to the Agent.
FFCA Documents. Collectively, the FFCA Agreement, the FFCA Franchisor
Certificates, the FFCA Guaranty and the FFCA Leases.
FFCA Franchisor Certificates. Those certain BKC Franchisor Certificates
executed by BKC with respect to the franchise, license or area development
agreements by and between the Borrower, AmeriKing Virginia and AmeriKing
Tennessee, as the case may be, and BKC, and in form and substance satisfactory
to the Agent.
FFCA Guaranty. The Unconditional Guaranty of Payment and Performance by
the Borrower in favor of FFCA of the obligations of AmeriKing Virginia and
AmeriKing Tennessee with respect to the FFCA Agreement and the FFCA Leases, and
in form and substance satisfactory to the Agent.
FFCA Leases. Those certain lease agreements by and between FFCA, as
lessor, and AmeriKing Virginia, as lessee, for each of the premises for which
the "Lessee" on Exhibit A thereto is AmeriKing Virginia, and by and between
FFCA, as lessor, and AmeriKing Tennessee, as lessee, for each of the premises
for which the "Lessee" on Exhibit A thereto is AmeriKing Tennessee, each in form
and substance satisfactory to the Agent.
FFCA NC Agreement. The Sale-Leaseback Agreement to be dated after the
Closing Date by and between FFCA and the Borrower, and in form and substance
satisfactory to the Agent.
FFCA NC Documents. Collectively, the FFCA NC Agreement, the FFCA NC
Franchisor Certificates, the FFCA NC Guaranty and the FFCA NC Leases.
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FFCA NC Franchisor Certificates. Those certain BKC Franchisor Certificates
executed by BKC with respect to the franchise, license or area development
agreements by and between the Borrower and BKC, and in form and substance
satisfactory to the Agent.
FFCA NC Leases. Those certain lease agreements by and between FFCA, as
lessor, and the Borrower, as lessee, for each of the premises for which the
"Lessee" on Exhibit A thereto is the Borrower, each in form and substance
satisfactory to the Agent.
FFCA NC Transaction. The transaction in which the Borrower shall cause the
transfer of certain Real Estate as more fully described in the FFCA NC Documents
to FFCA on a date subsequent to the Closing Date, and which Real Estate shall be
subject to a sale/leaseback transaction between FFCA and the Borrower pursuant
to the FFCA NC Documents.
FFCA Transaction. The transaction in which AmeriKing Virginia and
AmeriKing Tennessee shall cause the Virginia Sellers and AmeriKing Tennessee to
transfer certain Real Estate as more fully described in the FFCA Documents to
FFCA on February 7, 1996, and which Real Estate shall be subject to a
sale/leaseback transaction among FFCA, AmeriKing Virginia and AmeriKing
Tennessee pursuant to the FFCA Documents.
Franchise Agreements. The several Franchise Agreements (a) dated on or
prior to the Closing Date between the Borrower, AmeriKing Illinois, AmeriKing
Colorado, AmeriKing Tennessee, AmeriKing Cincinnati or AmeriKing Virginia, as
the case may be, and BKC, each in form and substance satisfactory to the Agent,
(b) dated after the Closing Date between the Borrower and BKC, each in form and
substance substantially similar to those Franchise Agreements entered into
between such parties on or prior to the Closing Date, (c) dated after the
Closing Date between any Restricted Subsidiary and BKC, each in form and
substance substantially similar to those Franchise Agreements entered into
between any other Restricted Subsidiary and BKC on or prior to the Closing Date,
and (d) dated after the Closing Date between any Unrestricted Subsidiary and
BKC, each in form and substance substantially similar to those Franchise
Agreements entered into between any other Unrestricted Subsidiary and BKC on or
prior to the Closing Date.
Friedman Acquisition. The transaction in which the Borrower purchased
certain of the assets and business of BNB and its affiliates consisting of
thirty-nine (39) restaurants pursuant to the Asset Purchase Agreement on
November 30, 1994.
Generally accepted accounting principles. (a) When used in (S)10, whether
directly or indirectly through reference to a capitalized term used therein,
means (i) principles that are consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors, in
effect on January 1, 1996, and (ii) to the extent consistent with such
principles, the accounting practice of the Borrower reflected in its financial
statements for the year ended on January 1, 1996, and (b) when used in general,
other than as provided above, means principles that are (i) consistent with the
principles promulgated or adopted by the Financial
<PAGE>
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Accounting Standards Board and its predecessors, as in effect from time to time,
and (ii) consistently applied with past financial statements of the Borrower
adopting the same principles, provided that in each case referred to in this
definition of "generally accepted accounting principles" a certified public
accountant would, insofar as the use of such accounting principles is pertinent,
be in a position to deliver an unqualified opinion (other than a qualification
regarding changes in generally accepted accounting principles) as to financial
statements in which such principles have been properly applied.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of (S)3(2) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate the benefits of which are guaranteed on termination in full or
in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
Guarantees. Collectively, (a) the Limited Guaranty, dated as of September
1, 1994, made by Holdings in favor of the Banks and the Agent pursuant to which
Holdings guaranties to the Banks and the Agent the payment and performance of
certain of the Obligations, as amended by the Security Documents Amendment, the
Second Security Documents Amendment and the Third Security Documents Amendment,
and as the same may be further amended, restated, supplemented or modified from
time to time; (b) the Guaranty dated as of February 7, 1996, made by AmeriKing
Cincinnati and AmeriKing Virginia in favor of the Banks and the Agent,
substantially in the form of Exhibit E-1 hereto, pursuant to which AmeriKing
Cincinnati and AmeriKing Virginia jointly and severally guaranty to the Banks
and the Agent the payment and performance of the Obligations, as amended by the
Third Security Documents Amendment, and as the same may be amended, restated,
supplemented or modified from time to time; and (c) the Guaranty, dated as of
December 3, 1996, made by AmeriKing Illinois in favor of the Banks and the
Agent, substantially in the form of Exhibit E-2 hereto, pursuant to which
AmeriKing Illinois guaranties to the Banks and the Agent the payment and
performance of the Obligations, as amended by the Third Security Documents
Amendment and as the same may be amended, restated, supplemented or modified
from time to time.
Hazardous Substances. See (S)7.18(b) hereof.
Holdings. As defined in the preamble hereto.
Indebtedness. All obligations, contingent and otherwise, that in
accordance with generally accepted accounting principles should be classified
upon the obligor's balance sheet as liabilities, or to which reference should be
made by footnotes thereto, including in any event and whether or not so
classified: (a) all debt and similar monetary obligations, whether direct or
indirect; (b) all liabilities secured by any mortgage, pledge, security
interest, lien, charge or other encumbrance existing on property owned or
acquired subject thereto, whether or not the liability secured thereby shall
have been assumed; and (c) all guarantees, endorsements and other contingent
obligations whether direct or indirect in respect of indebtedness of others,
including any obligation to supply funds to or in any manner to invest in,
directly or indirectly, the debtor, to purchase indebtedness, or to assure the
owner of indebtedness against loss, through an agreement to purchase goods,
supplies, or services for the
<PAGE>
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purpose of enabling the debtor to make payment of the indebtedness held by such
owner or otherwise, and the obligations to reimburse the issuer in respect of
any letters of credit.
Initial Acquisition. The transaction in which the Borrower purchased (a)
certain of the assets of BKC consisting of sixty-eight (68) restaurants, (b)
certain of the assets and business of Lawrence Jaro and/or his affiliates
consisting of eleven (11) restaurants and (c) certain of the assets and business
of William C. Osborn and/or his affiliates consisting of three (3) restaurants
pursuant to the Initial Asset Purchase Agreements on September 1, 1994.
Initial Asset Purchase Agreements. The several Asset Purchase Agreements
dated as of September 1, 1994 by and between (a) BKC and the Borrower, (b)
Lawrence Jaro and/or his affiliates and the Borrower, and (c) William C. Osborn
and/or his affiliates and the Borrower.
Intercompany Management Agreement. The Intercompany Management Consulting
Agreement dated as of September 1, 1994 by and between the Borrower and
Holdings.
Intercreditor Agreement. Collectively, (a) the Intercreditor Agreement
dated as of September 1, 1994 (as amended pursuant to a First Amendment to
Intercreditor Agreement dated as of December 30, 1994 and a Second Amendment to
Intercreditor Agreement dated as of the Closing Date), among BKC, the Borrower,
the Agent and MCIT PLC, as the same may be amended, restated, supplemented or
modified from time to time; and (b) the Intercreditor Agreement dated as of
February 7, 1996 (as amended pursuant to a First Amendment to Intercreditor
Agreement dated as of the Closing Date), among BKC, the Borrower, the Restricted
Subsidiaries and the Agent, as the same may be amended, restated, supplemented
or modified from time to time.
Interest Coverage Ratio. As at any date of determination and with respect
to Holdings, the ratio of (a) the sum of the EBITDA of Holdings and its
Subsidiaries for the Reference Period ending on such date to (b) Consolidated
Total Interest Expense of Holdings and its Subsidiaries for such Reference
Period.
Interest Payment Date. (a) As to any Base Rate Loan, the last day of the
calendar quarter which includes the Drawdown Date thereof; and (b) as to any
Eurodollar Rate Loan in respect of which the Interest Period is (i) 3 months or
less, the last day of such Interest Period and (ii) more than 3 months, the date
that is 3 months from the first day of such Interest Period and, in addition,
the last day of such Interest Period.
Interest Period. With respect to each Revolving Credit Loan (a) initially,
the period commencing on the Drawdown Date of such Revolving Credit Loan and
ending on the last day of one of the periods set forth below, as selected by the
Borrower in a Loan Request (i) for any Base Rate Loan, the last day of the
calendar quarter; and (ii) for any Eurodollar Rate Loan, 1, 2, 3, or 6 months;
and (b) thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such Revolving Credit Loan and ending on the last
day of one of the periods set forth above,
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as selected by the Borrower in a Conversion Request; provided that all of the
foregoing provisions relating to Interest Periods are subject to the following:
(i) if any Interest Period with respect to a Eurodollar Rate Loan
would otherwise end on a day that is not a Eurodollar Business Day, that
Interest Period shall be extended to the next succeeding Eurodollar
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Eurodollar Business Day;
(ii) if any Interest Period with respect to a Base Rate Loan would
end on a day that is not a Business Day, that Interest Period shall end on
the next succeeding Business Day;
(iii) if the Borrower shall fail to give notice as provided in
(S)2.7, the Borrower shall be deemed to have requested a conversion of the
affected Eurodollar Rate Loan to a Base Rate Loan and the continuance of
all Base Rate Loans as Base Rate Loans on the last day of the then current
Interest Period with respect thereto;
(iv) any Interest Period relating to any Eurodollar Rate Loan that
begins on the last Eurodollar Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Eurodollar
Business Day of a calendar month; and
(v) any Interest Period relating to any Eurodollar Rate Loan that
would otherwise extend beyond the Revolving Credit Loan Maturity Date shall
end on the Revolving Credit Loan Maturity Date.
Investments. All expenditures made (other than Capital Expenditures not
incurred or made in connection with the acquisition and/or development of
restaurants) and all liabilities incurred (contingently or otherwise) for the
acquisition of stock or Indebtedness of, or for loans, advances, capital
contributions or transfers of property to, or in respect of any guaranties (or
other commitments as described under Indebtedness), or obligations of, any
Person. In determining the aggregate amount of Investments outstanding at any
particular time: (a) the amount of any Investment represented by a guaranty
shall be taken at not less than the principal amount of the obligations
guaranteed and still outstanding; (b) there shall be included as an Investment
all interest accrued with respect to Indebtedness constituting an Investment
unless and until such interest is paid; (c) there shall be deducted in respect
of each such Investment any amount received as a return of capital in cash (but
only by repurchase, redemption, retirement, repayment, liquidating dividend or
liquidating distribution); (d) there shall not be deducted in respect of any
Investment any amounts received as earnings on such Investment, whether as
dividends, interest or otherwise, except that accrued interest included as
provided in the foregoing clause (b) may be deducted when paid; and (e) there
shall not be deducted from or added to, as the case may be, the aggregate amount
of Investments any decrease or increase, as the case may be, in the value
thereof.
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Investors. MCIT PLC, the Jordan Investors (as defined in the Stockholders
Agreement), the Management Stockholders (as defined in the Stockholders
Agreement) and the Executive and Advisors Stockholders (as defined in the
Stockholders Agreement).
Investor Subscription Agreement. The Jordan Investor Subscription
Agreement, dated as of September 1, 1994, by and among Holdings and the
Stockholders (as defined therein).
Jordan Affiliates. Leucadia Investors, Inc., John W. Jordan II, David W.
Zalaznick, Jonathan F. Boucher, John R. Lowden, Adam E. Max, A. Richard Caputo,
Jr., John M. Camp, Jordan/Zalaznick Capital Company, John M. Camp Profit Sharing
Plan, James E. Jordan, Jr. Profit Sharing Plan and Trust, John W. Jordan
Revocable Trust and Paul Rodzevick Profit Sharing Plan and Trust, Paul R.
Rodzevick, James E. Jordan, Thomas H. Quinn and JII Partners, Inc.
Jordan Principal. Collectively, (a) each partner, executive or employee of
TJC, (b) any wholly-owned Subsidiary of any one (or jointly of more than one of
any) Person specified in clause (a), and (c) the spouse or any immediate family
member of any Person specified in clause (a) or any trust solely for the benefit
of any such Person where the spouse or any immediate family member of such
Person.
Leases. The several leases (a) dated on or prior to the Closing Date
between (i) the Borrower, AmeriKing Colorado, AmeriKing Tennessee, AmeriKing
Cincinnati or AmeriKing Virginia, as the case may be, and BKC, (ii) the Borrower
and the current landlords of the restaurants acquired from Lawrence Jaro and/or
his affiliates in the Initial Acquisition, (iii) the Borrower and the current
landlords of the restaurants acquired from William C. Osborn in the Initial
Acquisition, (iv) the Borrower and the current landlords of the restaurants
acquired from BNB if such real property is not owned by BNB, (v) the Borrower
and BNB as to those restaurants acquired from BNB for which BNB and/or an
affiliate of BNB is the owner of the real property, or such successor in
interest to BNB, (vi) AmeriKing Colorado and the current landlords of the
restaurants acquired in the AmeriKing Colorado Acquisition, (vii) AmeriKing
Tennessee and the current landlords of the restaurants acquired in the AmeriKing
Tennessee Acquisition, (viii) AmeriKing Cincinnati and the current landlords of
the restaurants to be acquired in the AmeriKing Cincinnati Acquisition, (ix)
AmeriKing Virginia and the current landlords of the restaurants to be acquired
in the AmeriKing Virginia Acquisition, (x) AmeriKing Virginia and AmeriKing
Tennessee and FFCA, all in form and substance acceptable to the Agent and (xi)
AmeriKing Virginia and certain of the Virginia Sellers of the restaurants
acquired in connection with the AmeriKing Virginia Acquisition, and (xii) the
Borrower and the current landlords or owners of the restaurants to be acquired
in the AmeriKing NC Acquisition; (b) dated after the Closing Date between the
Borrower and the owner of the real property which is the subject of such lease,
so long as the terms and conditions of such leases are in form and substance
substantially similar to those leases entered into by the Borrower on or prior
to the Closing Date; (c) dated after the Closing Date between any Restricted
Subsidiary and the owner of the real property which is the subject of such
lease, so long as the terms and conditions of such leases are in form and
substance substantially similar to those leases entered into by any other
Restricted Subsidiary on or prior to the Closing
<PAGE>
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Date; and (d) dated after the Closing Date between any Unrestricted Subsidiary
and the owner of the real property which is the subject of such lease, so long
as the terms and conditions of such leases are in form and substance
substantially similar to those leases entered into by any other Unrestricted
Subsidiary on or prior to the Closing Date.
Letter of Credit. See (S)4.1.1 hereof.
Letter of Credit Application. See (S)4.1.1 hereof.
Letter of Credit Fee. See (S)4.6 hereof.
Letter of Credit Participation. See (S)4.1.4 hereof.
Leverage Ratio. As at any date of determination, the ratio of (a) Total
Funded Indebtedness of Holdings and its Subsidiaries outstanding on such date
less cash and Cash Equivalents of Holdings and its Subsidiaries on such date to
(b) the EBITDA of Holdings and its Subsidiaries for any period of four
consecutive fiscal quarters (treated as a single accounting period) ended on
such date provided, when calculating the Leverage Ratio for any period in which
a Permitted Acquisition occurred, the calculation of the Leverage Ratio shall be
made on a Pro Forma Basis.
Loan Documents. This Credit Agreement, the Revolving Credit Notes, the
Letter of Credit Applications, the Letters of Credit, the Fee Letter, the
Intercreditor Agreement and the Security Documents.
Loan Request. See (S)2.6 hereof.
Majority Banks. As of any date, if there are less than three (3) Banks,
all the Banks, and if there are three (3) or more Banks, the Banks holding at
least fifty one percent (51%) of the outstanding principal amount of the
Revolving Credit Notes and the unfunded portion of the Commitments on such date,
and if no such principal is outstanding, the Banks whose aggregate Commitments
constitute at least fifty one percent (51%) of the Total Commitment.
Management Agreement. The Management Agreement as of September 1, 1994, by
and among TJC Management Corp., Holdings and the Borrower, as amended by
Amendment No. 1 to Management Agreement dated February 7, 1996.
Management Subscription Agreement. The Management Subscription Agreement,
dated as of September 1, 1994, as amended by Amendment No. 1 to Management
Subscription Agreement dated as of December 3, 1996, between Holdings and the
Stockholders (as defined therein).
Maximum Drawing Amount. The maximum aggregate amount that the
beneficiaries may at any time draw under outstanding Letters of Credit, as such
aggregate amount may be reduced from time to time pursuant to the terms of the
Letters of Credit.
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Mortgage Amendment. The First Amendment to Leasehold Mortgage, dated on or
prior to the Closing Date, between AmeriKing Virginia and the Agent, and in form
and substance satisfactory to the Agent.
Mortgaged Property. Any Real Estate which is subject to any Mortgage. The
Mortgaged Properties on the Closing Date shall include those properties listed
on Schedule 1A attached hereto.
Mortgages. The several mortgages and deeds of trust, (a) dated on or prior
to the Closing Date, as amended by the Mortgage Amendment; or (b) entered into
after the Closing Date pursuant to (S)8.15, from the Borrower and its Restricted
Subsidiaries to the Agent with respect to the leasehold interests of the
Borrower and its Restricted Subsidiaries in the Real Estate, in substantially
the form of Exhibit I attached hereto.
Multiemployer Plan. Any multiemployer plan within the meaning of (S)3(37)
of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate.
Net Sale Proceeds. The net proceeds received by Holdings or any of its
Subsidiaries in respect of any asset sale or disposition, less all reasonable
out of pocket fees, commissions, taxes paid as a result of such sale or
disposition and other expenses incurred in connection with such asset sale or
disposition.
Nominally Financed Acquisition. A Permitted Financed Acquisition in which
(a) the total amount of Revolving Credit Loans requested by the Borrower for
such acquisition or a series of related acquisitions does not exceed, in the
aggregate, $5,000,000 and (b) the amount of the Revolving Credit Loan requested,
when taken together will all other Revolving Credit Loans made at any time after
the Closing Date to provide funds for Nominally Financed Acquisitions does not
exceed, in the aggregate, $10,000,000.
Non-Affected Bank(s). As at any date of determination, those Banks which
are not Affected Banks.
Obligations. All indebtedness, obligations and liabilities of any of
Holdings, the Borrower and their Subsidiaries to any of the Banks and the Agent,
individually or collectively, existing on the date of this Credit Agreement or
arising thereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise, arising or
incurred under this Credit Agreement or any of the other Loan Documents (other
than the Warrants) or in respect of any of the Revolving Credit Loans made or
Reimbursement Obligations incurred or any of the Revolving Credit Notes, Letter
of Credit Application, Letter of Credit, or arising or incurred in connection
with any interest rate protection arrangements contemplated by (S)8.15 or any
documents, agreements or instruments executed in connection therewith, or other
instruments at any time evidencing any thereof.
Offering. The public offering by Holdings of the Senior Notes and the
Units pursuant to a registration statement on Form S-1 (File No. 333-04261) (the
"Registration Statement").
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Offering Documents. Collectively, the Exchange Debentures, the Exchange
Debenture Indenture, the Senior Notes, the Senior Notes Indenture, the
Certificate of Designation and the Restated Certificate of Incorporation, and
all documents, instruments and agreements executed in connection with any of the
foregoing.
Option. The option of the Borrower or its assignee or designee to purchase
certain real property from BNB pursuant to (S)19 of the Asset Purchase
Agreement.
Outstanding. With respect to the Revolving Credit Loans, the aggregate
unpaid principal thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by (S)4002 of ERISA
and any successor entity or entities having similar responsibilities.
Perfection Certificate. The Second Amended and Restated Perfection
Certificate, as defined in the Security Agreement.
Permitted Acquisitions. See (S)9.5.1 hereof.
Permitted Acquisition Closing Date. The first date on which the conditions
set forth in the relevant Permitted Acquisition Purchase Agreement have been
satisfied and such Permitted Financed Acquisition has occurred.
Permitted Acquisition Documents. Collectively, the Permitted Acquisition
Purchase Agreement and all documents, instruments and agreement executed in
connection therewith.
Permitted Acquisition Purchase Agreement. Any of the asset and/or stock
purchase agreements relating to a Permitted Financed Acquisition (other than a
Nominally Financed Acquisition) dated on or prior to the Revolving Credit Loan
Maturity Date between the Borrower or any of its Restricted Subsidiaries and the
sellers of such assets and/or stock, each such agreement to be in form and
substance satisfactory to the Agent.
Permitted Financed Acquisition. The Acquisition(s) by the Borrower or any
of its Restricted Subsidiaries of certain of the assets and/or stock of a
Person, which assets being acquired consist of, among other items, BCK
Restaurants, pursuant to the terms of a Permitted Acquisition Purchase Agreement
and which acquisition is (a) financed in whole or in part by a Revolving Credit
Loan and (b) which is a Permitted Acquisition.
Permitted Liens. Liens, security interests and other encumbrances
permitted by (S)9.2.
Person. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
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Preferred Stock. As applied to the capital stock of any Person, means the
capital stock of any class or classes (however designated) that is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such corporation, over
shares of capital stock of any other class of such Person.
Pro Forma Basis. Following a permitted acquisition other than Permitted
Acquisitions in connection with the development of restaurants, the Total Funded
Indebtedness (or, in the case of consolidated Total Interest Expenses, all
indebtedness) and EBITDA for the fiscal quarter in which such Permitted
Acquisition occurred and each of the three fiscal quarters immediately following
such Permitted Acquisition with reference to the audited historical financial
results of the Person so acquired and Holdings and its Subsidiaries for the
applicable test period after giving effect on a pro forma basis to such
Permitted Acquisition and assuming that such permitted acquisition had been
consummated at the beginning of such Test Period in the manner described in (i),
(ii) and (iii) below:
(i) all Indebtedness (whether under this Credit Agreement or
otherwise) and any other balance sheet adjustments incurred or made in
connection with the Permitted Acquisition shall be deemed to have been
incurred or made on the first day of the Test Period, and all Indebtedness
of the Person acquired or to be acquired in such Permitted Acquisition
which was or will have been repaid in connection with the consummation of
the Permitted Acquisition shall be deemed to have been repaid concurrently
with the incurrence of the Indebtedness incurred in connection with the
Permitted Acquisition;
(ii) all Indebtedness assumed to have been incurred pursuant to the
preceding clause (i) shall be deemed to have borne interest at the sum of
(a) the arithmetic mean of (x) the Eurodollar Rate for Eurodollar Rate
Loans having an Interest Period of one month in effect on the first day of
the Test Period and (y) the Eurodollar Rate for Eurodollar Rate Loans
having an Interest Period of one month in effect on the last day of the
Test Period plus (b) the applicable margin for revolving credit loans then
in effect (after giving effect to the Permitted Acquisition on a pro forma
basis); and
(iii) other reasonable cost savings, expenses and other income
statement or operating statement adjustments which are attributable to the
change in ownership and/or management resulting from such Permitted
Acquisition as may be approved by the Agent in writing (which approval
shall not be unreasonably withheld) shall be deemed to have been realized
on the first day of the Test Period.
Rate Adjustment Period. See the definition of Applicable Margin.
Real Estate. All real property at any time owned or leased (as lessee or
sublessee) by the Borrower or any of its Subsidiaries.
Record. The grid attached to a Revolving Credit Note, or the continuation
of such grid, or any other similar record, including computer records,
maintained by any
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Bank with respect to any Revolving Credit Loan referred to in such Revolving
Credit Note.
Reference Bank. BKB.
Reference Period. The period of four (4) consecutive fiscal quarters (or
such shorter period of one, two or three full consecutive fiscal quarters as has
elapsed since the Closing Date).
Reimbursement Obligation. The Borrower's obligation to reimburse the Agent
and the Banks on account of any drawing under any Letter of Credit as provided
in (S)4.2.
Restated Certificate of Incorporation. The Amended and Restated
Certificate of Incorporation of Holdings, dated as of December 3, 1996 and in
form and substance satisfactory to the Agent and the Banks.
Restaurant Cash Flow. For each restaurant, the EBITDA of such restaurant
for the period of the immediately preceding twelve (12) months plus, to the
extent deducted in calculating EBITDA, the aggregate amount of allocated general
and administrative expenses not directly associated with such restaurant during
such period in accordance with past practices of the Borrower.
Restricted Payment. In relation to the Borrower and its Subsidiaries, (a)
any Distribution or (b) any payment or transfer of property by the Borrower or
its Subsidiaries to Holdings or to any other Affiliate of the Borrower or
Holdings.
Restricted Subsidiary. Any Subsidiary of the Borrower which is not an
Unrestricted Subsidiary.
Revolver Increase. See (S)2.1.2.
Revolver Increase Date. See (S)2.1.2.
Revolving Credit Loan Maturity Date. June 30, 2002.
Revolving Credit Loans. Revolving credit loans made or to be made by the
Banks to the Borrower pursuant to (S)2.
Revolving Credit Notes. See (S)2.4 hereof.
Second Security Documents Amendment. The Second Amendment of Security
Documents Agreement dated as of February 7, 1996, amending certain provisions of
certain of the Security Documents among the parties to each of the Security
Documents being amended.
Securities Purchase Agreement. That certain Securities Purchase Agreement
dated as of November 30, 1994, between Holdings and BBI pursuant to which (a)
certain junior subordinated notes in an original aggregate principal amount of
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$600,000 were issued by Holdings and (b) BBI purchased $1,900,000 of preferred
stock of Holdings, as amended by Amendment No. 1 to the Securities Purchase
Agreement dated as of February 7, 1996 between Holdings and BBI, and as the same
may be further amended and in effect from time to time in accordance with the
terms of this Credit Agreement and the other Loan Documents.
Security Agreements. Collectively, (a) the Security Agreement, dated as of
September 1, 1994, between the Borrower and the Agent, substantially in the form
of Exhibit F-1 hereto, as amended by the Security Documents Amendment, the
Second Security Documents Amendment and the Third Security Documents Amendment,
and as the same may be further amended, restated, supplemented or modified from
time to time; (b) the Security Agreement, dated as of February 7, 1996 among
AmeriKing Cincinnati, AmeriKing Virginia and the Agent, substantially in the
form of Exhibit F-2 hereto, as amended by the Third Security Documents
Amendment, and as the same may be amended, restated, supplemented or modified
from time to time, and (c) the Security Agreement, dated as of December 3, 1996
between Ameriking Illinois and the Agent, substantially in the form of Exhibit
F-3 hereto, as amended by the Third Security Documents Amendment and as the same
may be amended, restated, supplemented or modified from time to time.
Security Documents. The Guarantees, the Security Agreements, the Borrower
Stock Pledge Agreement, the Subsidiary Stock Pledge Agreement, the Mortgages and
the Stock Pledge Agreements.
Security Documents Amendment. The First Amendment of Security Documents
Agreement dated as of November 30, 1994, amending certain provisions of the
Security Documents between the parties to each of the Security Documents.
Senior Exchange Preferred Stock. The Senior Exchangeable Preferred Stock
due 2008 of Holdings issued pursuant to the Offering.
Senior Notes. The 10.75% Senior Notes due 2006 issued by Holdings in the
aggregate principal amount of $100,000,000 pursuant to the Senior Notes
Indenture.
Senior Notes Indenture. The Indenture dated as of December 3, 1996 between
Holdings and Fleet National Bank, as trustee, and in form and substance
satisfactory to the Agent and the Banks.
Stock Pledge Agreement. The Stock Pledge Agreement, dated as of September
1, 1994, between Holdings and the Agent, substantially in the form of Exhibit G
hereto, as amended by the Security Documents Amendment, the Second Security
Documents Amendment and the Third Security Documents Amendment and as the same
may be further amended, restated, supplemented or modified from time to time.
Stockholders Agreement. The Amended and Restated Stockholders Agreement
dated as of December 3, 1996, among the Borrower, BBI, the investors and
Holdings, in form and substance satisfactory to the Agent and the Banks.
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Subordinated Agreement. That certain Amended and Restated Purchase
Agreement, dated as of February 6, 1996, in form and substance satisfactory to
the Agent, and as such Agreement may be amended and in effect from time to time
in accordance with the terms of this Credit Agreement and the other Loan
Documents.
Subordinated Debt. Indebtedness of Holdings, the Borrower or any of their
Subsidiaries evidenced by the Subordination Documents, that is expressly
Subordinated and made junior to the payment and performance in full of the
Obligations, and other Indebtedness incurred under the Subordinated Agreement.
Subordinated Notes. Any Non-Negotiable Three Year Junior Subordinated
Notes issued pursuant to the Management Subscription Agreement.
Subordination Documents. The Subordinated Notes and that portion of the
Securities Purchase Agreement which governs the subordinated notes issued to
BBI.
Subsidiary. Any corporation, association, trust, or other business entity
of which the designated parent shall at any time own directly or indirectly
through a Subsidiary or Subsidiaries at least a majority (by number of votes) of
the outstanding voting stock.
Subsidiary Stock Pledge Agreement. The Stock Pledge Agreement, dated as of
February 7, 1996, between AmeriKing Tennessee and the Agent, as amended by the
Third Security Documents Amendment and as the same may be amended, restated,
supplemented or modified from time to time.
Survey. In relation to each Mortgaged Property, an instrument survey of
such Mortgage Property which shall show the location of all buildings,
structures, easements and utility lines on such Mortgaged Property, shall be
sufficient to remove the survey exception from the Title Policy, shall show that
all buildings and structures are within the lot lines of such Mortgaged
Property, shall not show any material encroachments by others, shall show the
zoning district or districts in which such Mortgaged Property is located in a
flood hazard district as established by the Federal Emergency Management Agency
or any successor agency or is located in any flood plain, flood hazard or
wetland protection district established under federal, state or local law.
Surveyor Certificate. In relation to each Mortgaged Property for which a
Survey has been conducted, a certificate executed by the surveyor who prepared
such Survey dated as of a recent date and containing such information relating
to such Mortgaged Property as the Agent or the Title Insurance Company may
require, such certificate to be reasonably satisfactory to the Agent in form and
substance.
Tax Sharing Agreement. The Amended and Restated Tax Sharing Agreement,
dated on or prior to the Closing Date, by and among Holdings, the Borrower and
their Subsidiaries, which shall be in form and substance satisfactory to the
Agent.
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Test Period. The period of all fiscal quarters (and any portion of a
fiscal quarter) included in any covenant calculation and occurring prior to the
date of such Permitted Acquisition as set forth in the definition of Pro Forma
Basis.
Third Security Documents Amendment. The Third Amendment of Security
Documents Agreement dated or to be dated on or prior to the Closing Date,
amending certain provisions of certain of the Security Documents among the
parties to each of the Security Documents being amended, and in form and
substance satisfactory to the Banks and the Agent.
Title Insurance Company. Lawyers Title Insurance Company.
Title Policy. In relation to each Mortgaged Property, an ALTA standard
form title insurance policy issued by the Title Insurance Company (with such
reinsurance or co-insurance as the Agent may reasonably require, any such
reinsurance to be with direct access endorsements) in such amount as may be
reasonably determined by the Agent insuring the priority of the Mortgage of such
Mortgaged Property and that the Borrower or one of its Subsidiaries holds
marketable leasehold title to such Mortgaged Property, subject only to the
encumbrances permitted by such Mortgage and which shall not contain exceptions
for mechanics liens or persons in occupancy, shall not insure over any matter
except to the extent that any such affirmative insurance is acceptable to the
Agent in its reasonable discretion, and shall contain such endorsements and
affirmative insurance as the Agent in its discretion may reasonably require, if
available in the applicable jurisdiction, including but not limited to (a)
comprehensive endorsement, (b) variable rate of interest endorsement, (c) usury
endorsement, (d) revolving credit endorsement, (e) tie-in endorsement, (f) doing
business endorsement and (g) ALTA form 3.1 zoning endorsement.
TJC. The Jordan Company, a New York general partnership.
Total Commitment. The sum of the Commitments of the Banks, as in effect
from time to time.
Total Debt Service. For any period with respect to the Borrower and its
subsidiaries, all scheduled mandatory payments of principal on Indebtedness of
The Borrower and its Subsidiaries (other than Indebtedness relating to Franchise
Agreements, leases, licenses and other agreements with BKC) made or required to
be made in that period plus the Consolidated Total Interest Expense of the
Borrower and its Subsidiaries for that period.
Total Funded Indebtedness. All Indebtedness of the Borrower and its
Subsidiaries for borrowed money, purchase money indebtedness and with respect to
Capitalized Leases, determined on a consolidated basis in accordance with
generally accepted accounting principles.
Type. As to any Revolving Credit Loan, its nature as a Base Rate Loan or a
Eurodollar Rate Loan.
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Unfunded Portion. The amount by which the Revolver Increase exceeds the
aggregate amounts of the Commitments of each of Banks after each Bank has made
its election to either increase its Commitment by its pro rata share of the
Revolver Increase, increase its Commitment by some lesser amount or not increase
its Commitment, all in accordance with (S)2.1.2 hereof.
Uniform Customs. With respect to any Letter of Credit, the Uniform Customs
and Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500 or any successor version thereto adopted by the
Agent in the ordinary course of its business as a letter of credit issuer and in
effect at the time of issuance of such Letter of Credit.
Units. The $30,000,000 aggregate amount of Units (as such term is defined
in the Registration Statement) consisting of 30,000 shares of Senior Exchange
Preferred Stock and 30,000 shares of Common Stock of Holdings.
Unpaid Reimbursement Obligation. Any Reimbursement Obligation for which
the Borrower does not reimburse the Agent And the Banks On the date specified
in, and in accordance with, (S)4.2.
Unrestricted Subsidiary. Each Subsidiary of the Borrower formed or
acquired after the Closing Date as to which (a) the Board of Directors of the
Borrower has designated such Subsidiary as an Unrestricted Subsidiary at or
prior to the time such Subsidiary is formed or acquired by the Borrower, as the
case may be, and the Borrower has provided written notice to the Agent in
reasonable detail of such designation within five (5) Business Days after
designation thereof; (b) the Borrower owns not less than eighty percent (80%) of
the capital stock of such Subsidiary and eighty percent (80%) of the Voting
Stock of such Subsidiary; (c) such Subsidiary has become a party to the Tax
Sharing Agreement; (d) all of such Subsidiary's liabilities are non-recourse as
to Holdings, the Borrower or any Restricted Subsidiary; and (e) no Jordan
Principal owns capital stock of such Subsidiary (except indirectly through
Holdings).
Virginia Sellers. C&N Dining, Inc. and its Affiliates (as defined in the
AmeriKing/Virginia Asset Purchase Agreement).
Voting Stock. Stock or similar equity interest of a Person pursuant to
which the holders thereof have, at the time of determination, the general voting
power under ordinary circumstances to vote for the election of directors (or
persons performing similar functions), managers, trustees or general partners of
such Person (irrespective of whether or not at the time any other class or
classes will have or might have voting power by reason of the happening of any
contingency).
Warrants. The warrants issued to BBI by Holdings.
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1.2. Rules of Interpretation.
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Credit Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or modification to
such law.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting terms not otherwise defined herein have the meanings
assigned to them by generally accepted accounting principles applied on a
consistent basis by the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not limiting.
(g) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in the Commonwealth of Massachusetts, have the
meanings assigned to them therein, with the term "instrument" being that
defined under Article 9 of the Uniform Commercial Code.
(h) Reference to a particular "(S)" refers to that section of this
Credit Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Credit Agreement as a whole and not to any
particular section or subdivision of this Credit Agreement.
2. THE REVOLVING CREDIT FACILITY.
--- --------- ------ --------
2.1 Commitment to Lend.
2.1.1. Commitment to Lend. Subject to the terms and conditions set
forth in this Credit Agreement (including, but not limited to those
requirements set forth in (S)2.6 below), each of the Banks severally agrees
to lend to the Borrower and the Borrower may borrow, repay, and reborrow
from time to time between the Closing Date and the Revolving Credit Loan
Maturity Date upon notice by the Borrower to the Agent given in accordance
with (S)2.6, such sums as are requested by the Borrower up to a maximum
aggregate amount outstanding (after giving effect to all amounts requested)
at any one time equal to such Bank's Commitment minus such Bank's
Commitment Percentage of the sum of the Maximum Drawing Amount and all
Unpaid Reimbursement Obligations, provided that the sum of the outstanding
amount of the Revolving Credit Loans (after giving effect to all amounts
requested) plus the Maximum Drawing
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Amount and all Unpaid Reimbursement Obligations shall not at any time exceed the
Total Commitment. The Revolving Credit Loans shall be made pro rata in
accordance with each Bank's Commitment Percentage. Each request for a Revolving
Credit Loan hereunder shall constitute a representation and warranty by the
Borrower that the conditions set forth in (S)11 and (S)12, in the case of the
initial Revolving Credit Loans to be made on the Closing Date, and (S)12, in the
case of all other Revolving Credit Loans, have been satisfied on the date of
such request. Notwithstanding anything to the contrary contained herein, the
Borrower shall only be permitted to borrow Revolving Credit Loans to finance any
portion of a Permitted Acquisition during the period from the Closing Date until
the third anniversary of the Closing Date.
2.1.2 Increase of the Commitments. The Commitment of each Bank and the
Total Commitment shall be as set forth on Schedule 1 attached hereto; provided,
however, at any time from the Closing Date through and including the third
anniversary of the Closing Date, so long as no Default or Event of Default has
occurred and is continuing, the Borrower shall be permitted, by a written
request in the form of Exhibit C hereto (the "Commitment Increase Request"), to
request that the Total Commitment be increased by $25,000,000 (the "Revolver
Increase") and each Bank's Commitment be increased by its pro rata share of the
Revolver Increase. Any such increase in any Bank's Commitment shall be in such
Bank's sole and absolute discretion. The Commitment Increase Request, if any,
for the Revolver Increase shall be given by the Borrower to the Agent and the
Banks not less than twenty (20) Business Days prior to the date the Borrower
requests that such Revolver Increase take effect (the "Revolver Increase Date").
Except as expressly provided in this (S)2.1.2, no increase of the Total
Commitment pursuant to this (S)2.1.2 shall be effective unless such request has
been approved in writing by the Majority Banks, and no increase in any Bank's
Commitment shall be effective unless such request has been approved in writing
by such Bank. If on or prior to five (5) Business Days prior to the Revolver
Increase Date the Majority Banks fail to consent to the Revolver Increase, the
Total Commitment and each Bank's Commitment shall remain as set forth on
Schedule 1 as of the Closing Date. If on or prior to ten (10) Business Days
prior to the Revolver Increase Date the Majority Banks consent to the Revolver
Increase and all of the Banks consent to the pro rata increase in each such
Bank's Commitment, the Total Commitment and each Bank's Commitment shall be
automatically increased on the Revolver Increase Date, and the Schedule 1
attached hereto shall be amended by deleting such Schedule 1 in its entirety and
substituting in place thereof a new Schedule 1 setting forth the revised Total
Commitment and Commitments of each Bank. If on or prior to ten (10) Business
Days prior to the Revolver Increase Date the Majority Banks consent to the
Revolver Increase but any Bank does not consent to an increase in its
Commitment, or elects to increase its Commitment by an amount which is less than
such Bank's pro rata share of the Revolver Increase, the Agent shall provide
notice of such decision to the Borrower and the other Banks, and any Bank which
has already consented to increase its Commitment by its pro rata share of the
Revolver Increase shall be permitted to increase its Commitment by an amount
equal to the Unfunded Portion, provided, however, in the event the
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amount by which Banks requesting to increase their respective Commitments
exceed the amount of the Unfunded Portion, the Agent shall allocate the
Unfunded Portion among the Banks requesting an increase in their respective
Commitments on a pro rata basis. In the event an Unfunded Portion still
exists after all the Banks have had the opportunity to increase their
respective Commitments, the Borrower shall be permitted to request that
another lending institution (which shall be an Eligible Assignee) be
permitted to become a Bank hereunder with a Commitment of not more than the
Unfunded Portion, which lender shall become a party hereto with all the
rights and obligations of a Bank upon the approval of the Agent and the
Majority Banks, such approval not to be unreasonably withheld. On the
Revolver Increase Date the Total Commitment shall be increased in an amount
which equals the Revolver Increase less the Unfunded Portion remaining on
such date, if any, and Schedule 1 attached hereto shall be amended by
deleting such Schedule 1 in its entirety and substituting in place thereof
a new Schedule 1 setting forth the revised Total Commitment, the Commitment
of each Bank and the Commitment Percentage of each Bank. Prior to the
Revolver Increase Date, the Borrower shall execute and deliver to the Agent
all supplemental agreements, certificates and documents as the Agent and
the Banks shall reasonably request (including without limitation,
replacement Revolving Credit Notes) to give effect to the foregoing
provision.
2.2. Commitment Fee. The Borrower agrees to pay to the Agent for the
accounts of the Banks in accordance with their respective Commitment Percentages
a commitment fee calculated at the rate of the Commitment Fee Rate per annum on
the average daily amount during each calendar quarter or portion thereof from
the Closing Date to the Revolving Credit Loan Maturity Date by which the Total
Commitment minus the sum of the Maximum Drawing Amount and all Unpaid
Reimbursement Obligations exceeds the outstanding amount of Revolving Credit
Loans during such calendar quarter. The commitment fee shall be payable
quarterly in arrears on the first day of each calendar quarter for the
immediately preceding calendar quarter commencing on the first such date
following the date hereof, with a final payment on the Revolving Credit Maturity
Date or any earlier date on which the Commitments shall terminate.
2.3. Reduction of Total Commitment. The Borrower shall have the right at
any time and from time to time upon seven (7) Business Days prior written notice
to the Agent to reduce by $5,000,000 or an integral multiple of $1,000,000 in
excess thereof the unborrowed portion of the Total Commitment or terminate
entirely the Total Commitment, whereupon the Commitments of the Banks shall be
reduced pro rata in accordance with their respective Commitment Percentages of
the amount specified in such notice or, as the case may be, terminated. Promptly
after receiving any notice of the Borrower delivered pursuant to this (S)2.3,
the Agent will notify the Banks of the substance thereof. Upon the effective
date of any such reduction or termination, the Borrower shall pay to the Agent
for the respective accounts of the Banks the full amount of any commitment fee
then accrued on the amount of the reduction. No reduction or termination of the
Commitments may be reinstated.
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2.4. The Revolving Credit Notes. The Revolving Credit Loans shall be
evidenced by separate amended and restated promissory notes of the Borrower in
substantially the form of Exhibit A hereto (each a "Revolving Credit Note"),
dated as of the Closing Date and completed with appropriate insertions. One
Revolving Credit Note shall be payable to the order of each Bank in a principal
amount equal to such Bank's Commitment or, if less, the outstanding amount of
all Revolving Credit Loans made by such Bank, plus interest accrued thereon, as
set forth below. The Borrower irrevocably authorizes each Bank to make or cause
to be made, at or about the time of the Drawdown Date of any Revolving Credit
Loan or at the time of receipt of any payment of principal on such Bank's
Revolving Credit Note, an appropriate notation on such Bank's Record reflecting
the making of such Revolving Credit Loan or (as the case may be) the receipt of
such payment. The outstanding amount of the Revolving Credit Loans set forth on
such Bank's Record shall be prima facie evidence of the principal amount thereof
owing and unpaid to such Bank, but the failure to record, or any error in so
recording, any such amount on such Bank's Record shall not limit or otherwise
affect the obligations of the Borrower hereunder or under any Revolving Credit
Note to make payments of principal of or interest on any Revolving Credit Note
when due.
2.2. Interest on Revolving Credit Loans. Except as otherwise provided in
(S)5.11,
(a) each Base Rate Loan shall bear interest for the period commencing
with the Drawdown Date thereof and ending on the last day of the Interest
Period with respect thereto at the rate per annum equal to the Base Rate
plus the Applicable Margin.
(b) Each Eurodollar Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at the rate per annum equal to the
Eurodollar Rate for such Interest Period plus the Applicable Margin.
(c) The Borrower promises to pay interest on each Revolving Credit
Loan in arrears on each Interest Payment Date with respect thereto.
2.6. Requests for Revolving Credit Loans. The Borrower shall give to the
Agent written notice in the form of Exhibit B hereto (or telephonic notice
confirmed in a writing in the form of Exhibit B hereto) of each Revolving Credit
Loan requested hereunder (a "Loan Request") no less than 1:00 p.m. (Boston time)
(a) one (1) Business Day prior to the proposed Drawdown Date of any Base Rate
Loan and (b) three (3) Eurodollar Business Days prior to the proposed Drawdown
Date of any Eurodollar Rate Loan, provided, however, the Borrower shall not
request any Eurodollar Rate Loans with an Interest Period of more than one month
until the date which is the earlier to occur of (i) sixty (60) Business Days
following the Closing Date or (ii) the date on which the Revolving Credit Loans
hereunder have been syndicated to the satisfaction of the Agent. Each such
notice shall specify (i) the principal amount of the Revolving Credit Loan
requested, (ii) the proposed Drawdown Date of such Revolving Credit Loan, (iii)
the Interest Period for such Revolving Credit Loan, (iv) the Type of such
Revolving Credit Loan and (v) whether the proceeds of such Revolving Credit Loan
shall be used to finance all or any part of a Permitted Acquisition. Promptly
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upon receipt of any such notice, the Agent shall notify each of the Banks
thereof. Each Loan Request shall be irrevocable and binding on the Borrower and
shall obligate the Borrower to accept the Revolving Credit Loan requested from
the Banks on the proposed Drawdown Date. Each Loan Request shall be in a minimum
aggregate amount of $500,000 or a larger integral multiple of $100,000. In
addition, if all or any portion of the proceeds of the Revolving Credit Loan
being requested is being used to finance all or any portion of a Permitted
Acquisition, except in the case of a Nominally Financed Acquisition, the
Borrower shall deliver to the Agent not less than five (5) days prior to the
proposed Drawdown Date of such Revolving Credit Loan a written notification
describing the relevant Permitted Financed Acquisition to be consummated, copies
of all material documents, agreements and instruments to be entered into by the
Borrower in connection with such Permitted Financed Acquisition, and the
purchase price for such Permitted Financed Acquisition (which purchase price
plus all transaction costs related thereto shall not be less than the amount of
the Revolving Credit Loan so requested). Subject to the foregoing, and subject
to the satisfaction of the conditions set forth in (S)12, so long as no Default
or Event of Default shall have occurred and be continuing, and all of the
applicable conditions set forth in this Credit Agreement shall have been met,
including, but not limited to the Borrower having taken all action necessary and
required pursuant to the terms of this Credit Agreement and the other Loan
Documents to perfect the Agent's first priority security interest in the assets
being acquired (or, in the event any Subsidiary is formed as a result of or in
connection with such acquisition, such Subsidiary shall be a Restricted
Subsidiary, and the Loan Documents shall be amended and/or supplemented as
necessary to make the terms and conditions of the Loan Documents applicable to
such Restricted Subsidiary), and the Agent being satisfied with the terms of the
proposed Permitted Financed Acquisition, each Bank shall lend to the Borrower
such Bank's Commitment Percentage of the Revolving Credit Loan so requested in
immediately available funds not later than the close of business on such
Drawdown Date.
2.7. Conversion Options.
2.7.1. Conversion to Different Type of Revolving Credit Loan. The
Borrower may elect from time to time to convert any outstanding Revolving
Credit Loan to a Revolving Credit Loan of another Type, provided that (a)
with respect to any such conversion of a Revolving Credit Loan to a Base
Rate Loan, the Borrower shall give the Agent at least one (1) Business
Day's prior written notice of such election; (b) with respect to any such
conversion of a Base Rate Loan to a Eurodollar Rate Loan, the Borrower
shall give the Agent at least three (3) Eurodollar Business Days prior
written notice of such election; (c) with respect to any such conversion of
a Eurodollar Rate Loan into a Base Rate Loan, such conversion shall only be
made on the last day of the Interest Period with respect thereto; (d) no
Revolving Credit Loan may be converted into a Eurodollar Rate Loan when any
Default or Event of Default has occurred and is continuing; (e) no
Revolving Credit Loan may be converted into a Eurodollar Rate Loan with an
Interest Period of more than thirty (30) days until the date which is the
earlier to occur of (i) sixty (60) Business Days after the Closing Date and
(ii) the date on which the Revolving Credit Loans hereunder have been
syndicated to the satisfaction of the Agent; and (f) no more than five (5)
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Eurodollar Rate Loans having different Interest Periods may be outstanding
at any time. On the date on which such conversion is being made each Bank
shall take such action as is necessary to transfer its Commitment
Percentage of such Revolving Credit Loans to its Domestic Lending Office or
its Eurodollar Lending Office, as the case may be. All or any part of
outstanding Revolving Credit Loans of any Type may be converted into a
Revolving Credit Loan of another Type as provided herein, provided that any
partial conversion shall be in an aggregate principal amount of $500,000 or
a larger integral multiple of $100,000 in excess thereof. Each Conversion
Request relating to the conversion of a Base Rate Loan to a Eurodollar Rate
Loan shall be irrevocable by the Borrower.
2.7.2. Continuation of Type of Revolving Credit Loan. Any Revolving
Credit Loan of any Type may be continued as a Revolving Credit Loan of the
same Type upon the expiration of an Interest Period with respect thereto by
compliance by the Borrower with the notice provisions contained in
(S)2.7.1; provided that no Eurodollar Rate Loan may be continued as such
when any Default or Event of Default has occurred and is continuing, but
shall be automatically converted to a Base Rate Loan on the last day of the
first Interest Period relating thereto ending during the continuance of any
Default or Event of Default of which officers of the Agent active upon the
Borrower's account have actual knowledge. In the event that the Borrower
fails to provide any such notice with respect to the continuation of any
Eurodollar Rate Loan as such, then such Eurodollar Rate Loan shall be
automatically converted to a Base Rate Loan on the last day of the first
Interest Period relating thereto. The Agent shall notify the Banks promptly
when any such automatic conversion contemplated by this (S)2.7 is scheduled
to occur.
2.7.3 Eurodollar Rate Loans. Any conversion to or from Eurodollar
Rate Loans shall be in such amounts and be made pursuant to such elections
so that, after giving effect thereto, the aggregate principal amount of all
Eurodollar Rate Loans having the same Interest Period shall not be less
than $500,000 or a larger integral multiple of $100,000 in excess thereof.
2.8. Funds for Revolving Credit Loan.
2.8.1. Funding Procedures. Not later than 1:00 p.m. (Boston time) on
the proposed Drawdown Date of any Revolving Credit Loans, each of the Banks
will make available to the Agent, at the Agent's Head Office, in
immediately available funds, the amount of such Bank's Commitment
Percentage of the amount of the requested Revolving Credit Loans. Upon
receipt from each Bank of such amount, and upon receipt of the documents
required by (S)(S)11 and 12 and the satisfaction of the other conditions
set forth therein, to the extent applicable, the Agent will make available
to the Borrower the aggregate amount of such Revolving Credit Loans made
available to the Agent by the Banks. The failure or refusal of any Bank to
make available to the Agent at the aforesaid time and place on any Drawdown
Date the amount of its Commitment Percentage of the requested Revolving
Credit Loans shall not relieve any other Bank from its several obligation
hereunder to make available to the Agent the
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amount of such other Bank's Commitment Percentage of any requested
Revolving Credit Loans.
2.8.2. Advances by Agent. The Agent may, unless notified to the
contrary by any Bank prior to a Drawdown Date, assume that such Bank has
made available to the Agent on such Drawdown Date the amount of such Bank's
Commitment Percentage of the Revolving Credit Loans to be made on such
Drawdown Date, and the Agent may (but it shall not be required to), in
reliance upon such assumption, make available to the Borrower a
corresponding amount. If any Bank makes available to the Agent such amount
on a date after such Drawdown Date, such Bank shall pay to the Agent on
demand an amount equal to the product of (a) the average computed for the
period referred to in clause (c) below, of the weighted average interest
rate paid by the Agent for federal funds acquired by the Agent during each
day included in such period, times (b) the amount of such Bank's Commitment
Percentage of such Revolving Credit Loans, times (c) a fraction, the
numerator of which is the number of days that elapse from and including
such Drawdown Date to the date on which the amount of such Bank's
Commitment Percentage of such Revolving Credit Loans shall become
immediately available to the Agent, and the denominator of which is 365. A
statement of the Agent submitted to such Bank with respect to any amounts
owing under this paragraph shall be prima facie evidence of the amount due
and owing to the Agent by such Bank. If the amount of such Bank's
Commitment Percentage of such Revolving Credit Loans is not made available
to the Agent by such Bank within three (3) Business Days following such
Drawdown Date, the Agent shall be entitled to recover such amount from the
Borrower on demand, with interest thereon at the rate per annum applicable
to the Revolving Credit Loans made on such Drawdown Date.
3. REPAYMENT OF THE REVOLVING CREDIT LOANS.
---------------------------------------
3.1. Maturity. The Borrower promises to pay on the Revolving Credit Loan
Maturity Date, and there shall become absolutely due and payable on the
Revolving Credit Loan Maturity Date, all of the Revolving Credit Loans
outstanding on such date, together with any and all accrued and unpaid interest
thereon.
3.2. Mandatory Repayments of Revolving Credit Loans. If at any time the
sum of the outstanding amount of the Revolving Credit Loans, the Maximum Drawing
Amount and all Unpaid Reimbursement Obligations exceeds the Total Commitment
then the Borrower shall immediately pay the amount of such excess to the Agent
for the respective accounts of the Banks for application: first, to any Unpaid
Reimbursement Obligations; second, to the Revolving Credit Loans; and third, to
provide to the Agent cash collateral for Reimbursement Obligations as
contemplated by (S)4.2(b) and (c). Each payment of any Unpaid Reimbursement
Obligations or prepayment of Revolving Credit Loans shall be allocated among the
Banks, in proportion, as nearly as practicable, to each Reimbursement Obligation
or (as the case may be) the respective unpaid principal amount of each Bank's
Revolving Credit Note, with adjustments to the extent practicable to equalize
any prior payments or repayments not exactly in proportion. In addition, in the
event Holdings or any of its Subsidiaries receives any cash proceeds from (a)
the sale or other disposition of assets
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permitted by (S)9.5 which cash proceeds are required by (S)9.5 to be repaid to
the Agent hereunder; or (b) the sale of any of the capital stock of the Borrower
or any of its Subsidiaries or any other equity issuance by the Borrower or any
of its Subsidiaries, such amounts shall be paid to the Agent for the pro rata
accounts of the Banks to be applied to the outstanding Revolving Credit Loans
and the Total Commitment concurrently shall be permanently reduced by such
amount.
3.3. Optional Repayments of Revolving Credit Loans. The Borrower shall have
the right, at its election, to repay the outstanding amount of the Revolving
Credit Loans, as a whole or in part, at any time without penalty or premium,
provided that any full or partial prepayment of the outstanding amount of any
Eurodollar Rate Loans pursuant to this (S)3.3 may be made only on the last day
of the Interest Period relating thereto, or, if such prepayment is made prior to
the last day of the Interest Period relating thereto, the Borrower pays any
costs associated with such prepayment as more fully described in (S)5.10. The
Borrower shall give the Agent, no later than 11:00 a.m. (Boston time), at least
one (1) Business Day prior written notice of any proposed prepayment pursuant to
this (S)3.3 of Base Rate Loans, and three (3) Eurodollar Business Days notice of
any proposed prepayment pursuant to this (S)3.3 of Eurodollar Rate Loans, in
each case specifying the proposed date of prepayment of Revolving Credit Loans
and the principal amount to be prepaid. Each such partial prepayment of the
Revolving Credit Loans shall be in an integral multiple of $100,000, shall be
accompanied by the payment of accrued interest on the principal prepaid to the
date of prepayment and shall be applied, in the absence of instruction by the
Borrower, first to the principal of Base Rate Loans and then to the principal of
Eurodollar Rate Loans. Each partial prepayment shall be allocated among the
Banks, in proportion, as nearly as practicable, to the respective unpaid
principal amount of each Bank's Revolving Credit Note, with adjustments to the
extent practicable to equalize any prior repayments not exactly in proportion.
4. LETTERS OF CREDIT.
-----------------
4.1. Letter of Credit Commitments.
4.1.1. Commitment to Issue Letters of Credit. Subject to the terms
and conditions hereof and the execution and delivery by the Borrower of a
letter of credit application on the Agent's customary form (a "Letter of
Credit Application"), the Agent on behalf of the Banks and in reliance upon
the agreement of the Banks set forth in (S)4.1.4 and upon the
representations and warranties of the Borrower contained herein, agrees, in
its individual capacity, to issue, extend and renew for the account of the
Borrower one or more standby or documentary letters of credit
(individually, a "Letter of Credit"), in such form as may be requested from
time to time by the Borrower and agreed to by the Agent; provided, however,
that, after giving effect to such request, (a) the sum of the Maximum
Drawing Amount and all Unpaid Reimbursement Obligations shall not exceed
$10,000,000 at any one time, and (b) the sum of (i) the Maximum Drawing
Amount on all Letters of Credit, (ii) all Unpaid Reimbursement Obligations,
and (iii) the amount of all Revolving Credit Loans outstanding shall not
exceed the Total Commitment
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4.1.2. Letter of Credit Applications. Each Letter of Credit
Application shall be completed to the satisfaction of the Agent. In the
event that any provision of any Letter of Credit Application shall be
inconsistent with any provision of this Credit Agreement, then the
provisions of this Credit Agreement shall, to the extent of any such
inconsistency, govern.
4.1.3. Terms of Letters of Credit. Each Letter of Credit issued,
extended or renewed hereunder shall, among other things, (a) provide for
the payment of sight drafts for honor thereunder when presented in
accordance with the terms thereof and when accompanied by the documents
described therein, and (b) have an expiry date no later than the date which
is fourteen (14) days (or, if the Letter of Credit is confirmed by a
confirming bank or otherwise provides for one or more nominated persons,
forty-five (45) days) prior to the Revolving Credit Loan Maturity Date.
Each Letter of Credit so issued, extended or renewed shall be subject to
the Uniform Customs.
4.1.4. Reimbursement Obligations of Banks. Each Bank severally agrees
that it shall be absolutely liable, without regard to the occurrence of any
Default or Event of Default or any other condition precedent whatsoever, to
the extent of such Bank's Commitment Percentage, to reimburse the Agent on
demand for the amount of each draft paid by the Agent under each Letter of
Credit to the extent that such amount is not reimbursed by the Borrower
pursuant to (S)4.2 (such agreement for a Bank being called herein the
"Letter of Credit Participation" of such Bank).
4.1.5. Participations of Banks. Each such payment made by a Bank shall
be treated as the purchase by such Bank of a participating interest in the
Borrower's Reimbursement Obligation under (S)4.2 in an amount equal to such
payment. Each Bank shall share in accordance with its participating
interest in any interest which accrues pursuant to (S)4.2.
4.2. Reimbursement Obligation of the Borrower. In order to induce the
Agent to issue, extend and renew each Letter of Credit and the Banks to
participate therein, the Borrower hereby agrees to reimburse or pay to the
Agent, for the account of the Agent or (as the case may be) the Banks, with
respect to each Letter of Credit issued, extended or renewed by the Agent
hereunder,
(a) except as otherwise expressly provided in (S)4.2(b) and (c), on
each date that any draft presented under such Letter of Credit is honored
by the Agent, or the Agent otherwise makes a payment with respect thereto,
(i) the amount paid by the Agent under or with respect to such Letter of
Credit, and (ii) the amount of any taxes, fees, charges or other costs and
expenses whatsoever incurred by the Agent or any Bank in connection with
any payment made by the Agent or any Bank under, or with respect to, such
Letter of Credit,
(b) upon the reduction (but not termination) of the Total Commitment
to an amount less than the Maximum Drawing Amount, an amount equal to such
difference, which amount shall be held by the Agent for the benefit of the
Banks and the Agent as cash collateral for all Reimbursement Obligations,
and
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(c) upon the termination of the Total Commitment, or the acceleration
of the Reimbursement Obligations with respect to all Letters of Credit in
accordance with (S)13, an amount equal to the then Maximum Drawing Amount
on all Letters of Credit, which amount shall be held by the Agent for the
benefit of the Banks and the Agent as cash collateral for all Reimbursement
Obligations.
Each such payment shall be made to the Agent at the Agent's Head Office in
immediately available funds. Interest on any and all amounts remaining unpaid by
the Borrower under this (S)4.2 at any time from the date such amounts become due
and payable (whether as stated in this (S)4.2, by acceleration or otherwise)
until payment in full (whether before or after judgment) shall be payable to the
Agent on demand at the rate specified in (S)5.11 for overdue principal on the
Revolving Credit Loans.
4.3. Letter of Credit Payments. If any draft shall be presented or other
demand for payment shall be made under any Letter of Credit, the Agent shall
notify the Borrower of the date and amount of the draft presented or demand for
payment and of the date and time when it expects to pay such draft or honor such
demand for payment. If the Borrower fails to reimburse the Agent as provided in
(S)4.2 on or before the date that such draft is paid or other payment is made by
the Agent, the Agent may at any time thereafter notify the Banks of the amount
of any such Unpaid Reimbursement Obligation. No later than 3:00 p.m. (Boston
time) on the Business Day next following the receipt of such notice, each Bank
shall make available to the Agent, at the Agent's Head Office, in immediately
available funds, such Bank's Commitment Percentage of such Unpaid Reimbursement
Obligation, together with an amount equal to the product of (a) the average,
computed for the period referred to in clause (c) below, of the weighted average
interest rate paid by the Agent for federal funds acquired by the Agent during
each day included in such period, times (b) the amount equal to such Bank's
Commitment Percentage of such Unpaid Reimbursement Obligation, times (c) a
fraction, the numerator of which is the number of days that elapse from and
including the date the Agent paid the draft presented for honor or otherwise
made payment to the date on which such Bank's Commitment Percentage of such
Unpaid Reimbursement obligation shall become immediately available to the Agent,
and the denominator of which is 360. The responsibility of the Agent to the
Borrower and the Banks shall be only to determine that the documents (including
each draft) delivered under each Letter of Credit in connection with such
presentment shall be in conformity in all material respects with such Letter of
Credit.
4.4. Obligations Absolute. The Borrower's obligations under this (S)4 shall
be absolute and unconditional under any and all circumstances and irrespective
of the occurrence of any Default or Event of Default or any condition precedent
whatsoever or any setoff, counterclaim or defense to payment which the Borrower
may have or have had against the Agent, any Bank or any beneficiary of a Letter
of Credit. The Borrower further agrees with the Agent and the Banks that the
Agent and the Banks shall not be responsible for, and the Borrower's
Reimbursement Obligations under (S)4.2 shall not be affected by, among other
things, the validity or genuineness of documents or of any endorsements thereon,
even if such documents should in fact prove to be in any or all respects
invalid, fraudulent or forged, or any dispute between or among the
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Borrower, the beneficiary of any Letter of Credit or any financing institution
or other party to which any Letter of Credit may be transferred or any claims or
defenses whatsoever of the Borrower against the beneficiary of any Letter of
Credit or any such transferee. The Agent and the Banks shall not be liable for
any error, omission, interruption or delay in transmission, dispatch or delivery
of any message or advice, however transmitted, in connection with any Letter of
Credit. The Borrower agrees that any action taken or omitted by the Agent or any
Bank under or in connection with each Letter of Credit and the related drafts
and documents, if done in good faith, shall be binding upon the Borrower and
shall not result in any liability on the part of the Agent or any Bank to the
Borrower.
4.5. Reliance by Issuer. To the extent not inconsistent with (S)4.4, the
Agent shall be entitled to rely, and shall be fully protected in relying upon,
any Letter of Credit, draft, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document believed by it to be genuine and correct and
to have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel, independent accountants and other
experts selected by the Agent. The Agent shall be fully justified in failing or
refusing to take any action under this Agreement unless it shall first have
received such advice or concurrence of the Majority Banks as it reasonably deems
appropriate or it shall first be indemnified to its reasonable satisfaction by
the Banks against any and all liability and expense which may be incurred by it
by reason of taking or continuing to take any such action. The Agent shall in
all cases be fully protected in acting, or in refraining from acting, under this
Agreement in accordance with a request of the Majority Banks, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
the Banks and all future holders of the Revolving Credit Notes or of a Letter of
Credit Participation.
4.6. Letter of Credit Fee. The Borrower shall pay to the Agent a fee (in
each case, a "Letter of Credit Fee") (a) in respect of each standby Letter of
Credit issued pursuant to this Credit Agreement, calculated at the rate of the
Applicable Margin per annum on the face amount of each such Letter of Credit,
and the Agent shall, in turn, remit to each Bank its pro rata share of a portion
of such Letter of Credit Fee calculated at a rate of the Applicable Margin minus
1/4% per annum on the face amount of each such Letter of Credit, and (b) in
respect of each documentary Letter of Credit issued pursuant to this Credit
Agreement, calculated at the rate of the Applicable Margin minus 1/2% per annum
on the face amount of such Letter of Credit, and the Agent shall, in turn, remit
to each Bank its pro rata share of a portion of such Letter of Credit Fee
calculated at a rate of the Applicable Margin minus 3/4% per annum on the face
amount of each such Letter of Credit. The Letter of Credit Fee for each Letter
of Credit shall be payable annually in advance, on the date of issuance of such
Letter of Credit, and on each anniversary thereof until such Letter of Credit
expires or is canceled. In addition, the Borrower shall pay to the Agent, for
its own account, the Agent's standard issuance, processing, negotiation,
amendment and administrative fees, determined in accordance with customary fees
and charges for similar facilities.
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5. CERTAIN GENERAL PROVISIONS.
--------------------------
5.1. Closing Fee. The Borrower agrees to pay to the Agent a closing fee and
an amendment fee in the amounts and at the times as set forth in the Fee Letter.
5.2. Agent's Fee. The Borrower shall pay to the Agent, an Agent's fee (the
"Agent's Fee") as provided in the Fee Letter.
5.3. Funds for Payments.
5.3.1. Payments to Agent. All payments of principal, interest,
Reimbursement Obligations, commitment fees, Letter of Credit Fees and any
other amounts due hereunder or under any of the other Loan Documents shall
be made to the Agent, for the respective accounts of the Banks and the
Agent, at the Agent's Head Office or at such other location in the Boston,
Massachusetts, area that the Agent may from time to time designate, in each
case in immediately available funds.
5.3.2. No Offset, etc. Except as otherwise provided in (S)5.7, all
payments by the Borrower hereunder and under any of the other Loan
Documents shall be made without setoff or counterclaim and free and clear
of and without deduction for any taxes, levies, imposts, duties, charges,
fees, deductions, withholdings, compulsory loans, restrictions or
conditions of any nature now or hereafter imposed or levied by any
jurisdiction or any political subdivision thereof or taxing or other
authority therein unless the Borrower is compelled by law to make such
deduction or withholding. Except as otherwise provided in (S)5.7, if any
such obligation is imposed upon the Borrower with respect to any amount
payable by it hereunder or under any of the other Loan Documents, the
Borrower will pay to the Agent, for the account of the Banks or (as the
case may be) the Agent, on the date on which such amount is due and payable
hereunder or under such other Loan Document, such additional amount in
Dollars as shall be necessary to enable the Banks or the Agent to receive
the same net amount which the Banks or the Agent would have received on
such due date had no such obligation been imposed upon the Borrower. The
Borrower will deliver promptly to the Agent certificates or other valid
vouchers for all taxes or other charges deducted from or paid with respect
to payments made by the Borrower hereunder or under such other Loan
Document.
5.4. Computations. All computations of interest on the Revolving Credit
Loans and of commitment fees, Letter of Credit Fees or other fees shall be based
on a 360-day year and paid for the actual number of days elapsed. Except as
otherwise provided in the definition of the term "Interest Period" with respect
to Eurodollar Rate Loans, whenever a payment hereunder or under any of the other
Loan Documents becomes due on a day that is not a Business Day, the due date for
such payment shall be extended to the next succeeding Business Day, and interest
shall accrue during such extension. The outstanding amount of the Revolving
Credit Loans as reflected on the Records from time to time shall be considered
correct and binding on the Borrower unless within five (5) Business Days after
receipt of any notice by the Agent or any of
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the Banks of such outstanding amount, the Agent or such Bank shall notify the
Borrower to the contrary.
5.5. Inability to Determine Eurodollar Rate. In the event, prior to the
commencement of any Interest Period relating to any Eurodollar Rate Loan, the
Agent shall determine or be notified by the Majority Banks that adequate and
reasonable methods do not exist for ascertaining the Eurodollar Rate that would
otherwise determine the rate of interest to be applicable to any Eurodollar Rate
Loan during any Interest Period, the Agent shall forthwith give notice of such
determination (which shall be conclusive and binding on the Borrower and the
Banks) to the Borrower and the Banks. In such event (a) any Loan Request or
Conversion Request with respect to Eurodollar Rate Loans shall be automatically
withdrawn and shall be deemed a request for Base Rate Loans, (b) each Eurodollar
Rate Loan will automatically, on the last day of the then current Interest
Period relating thereto, become a Base Rate Loan, and (c) the obligations of the
Banks to make Eurodollar Rate Loans shall be suspended until the Agent or the
Majority Banks determines that the circumstances giving rise to such suspension
no longer exist, whereupon the Agent or, as the case may be, the Agent upon the
instruction of the Majority Banks, shall so notify the Borrower and the Banks.
5.6. Illegality. Notwithstanding any other provisions herein, if any
present or future law, regulation, treaty or directive or the interpretation or
application thereof shall make it unlawful for any Bank to make or maintain
Eurodollar Rate Loans, such Bank shall forthwith give notice of such
circumstances to the Borrower and the other Banks and thereupon (a) the
commitment of such Bank to make Eurodollar Rate Loans or convert Revolving
Credit Loans of another Type to Eurodollar Rate Loans shall forthwith be
suspended and (b) such Bank's Revolving Credit Loans then outstanding as
Eurodollar Rate Loans, if any, shall be converted automatically to Base Rate
Loans on the last day of each Interest Period applicable to such Eurodollar Rate
Loans or within such earlier period as may be required by law. The Borrower
hereby agrees promptly to pay the Agent for the account of such Bank, upon
demand by such Bank, any additional amounts necessary to compensate such Bank
for any costs incurred by such Bank in making any conversion in accordance with
this (S)5.6, including any interest or fees payable by such Bank to lenders of
funds obtained by it in order to make or maintain its Eurodollar Loans
hereunder.
5.7. Additional Costs, etc. If any present or future applicable law, which
expression, as used herein, includes statutes, rules and regulations thereunder
and interpretations thereof by any competent court or by any governmental or
other regulatory body or official charged with the administration or the
interpretation thereof and requests, directives, instructions and notices at any
time or from time to time hereafter made upon or otherwise issued to any Bank or
the Agent by any central bank or other fiscal, monetary or other authority
(whether or not having the force of law), shall:
(a) subject any Bank or the Agent to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with respect to this
Credit Agreement, the other Loan Documents, any Letters of Credit, such
Bank's
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Commitment or the Revolving Credit Loans (other than taxes based upon or
measured by the income or profits of such Bank or the Agent), or
(b) materially change the basis of taxation (except for changes in
taxes on income or profits) of payments to any Bank of the principal of or
the interest on any Revolving Credit Loans or any other amounts payable to
any Bank or the Agent under this Credit Agreement or any of the other Loan
Documents, or
(c) impose or increase or render applicable (other than to the extent
specifically provided for elsewhere in this Credit Agreement) any special
deposit, reserve, assessment, liquidity, capital adequacy or other similar
requirements (whether or not having the force of law) against assets held
by, or deposits in or for the account of, or loans by, or letters of credit
issued by, or commitments of an office of any Bank, or
(d) impose on any Bank or the Agent any other conditions or
requirements with respect to this Credit Agreement, the other Loan
Documents, any Letters of Credit, the Revolving Credit Loans, such Bank's
Commitment, or any class of loans, letters of credit or commitments of
which any of the Revolving Credit Loans or such Bank's Commitment forms a
part,
and the result of any of the foregoing is:
(i) to increase the cost to any Bank of making, funding,
issuing, renewing, extending or maintaining any of the Revolving
Credit Loans or such Bank's Commitment or any Letter of Credit, or
(ii) to reduce the amount of principal, interest, Reimbursement
Obligation or other amount payable to such Bank or the Agent hereunder
on account of such Bank's Commitment, any Letter of Credit or any of
the Revolving Credit Loans, or
(iii) to require such Bank or the Agent to make any payment or
to forego any interest or Reimbursement Obligation or other sum
payable hereunder, the amount of which payment or foregone interest or
Reimbursement Obligation or other sum is calculated by reference to
the gross amount of any sum receivable or deemed received by such Bank
or the Agent from the Borrower hereunder,
then, and in each such case, the Borrower will, upon demand made by such Bank or
(as the case may be) the Agent at any time and from time to time and as often as
the occasion therefor may arise, pay to such Bank or the Agent such additional
amounts as will be sufficient to compensate such Bank or the Agent for such
additional cost, reduction, payment or foregone interest or Reimbursement
Obligation or other sum. On or before the date it becomes a party to this Credit
Agreement and from time to time thereafter upon any change in status rendering
any certificate or document previously delivered pursuant to this (S)5.7 invalid
or inaccurate, each Bank that is organized under the laws of a jurisdiction
outside the United States shall (but, with respect to any renewal or change in
status, if legally able to do so) deliver to the
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Borrower, (x) if such Bank is a "bank" within the meaning of Section
881(c)(3)(A) of the Code, Internal Revenue Service Form 1001 or Form 4224 and
any other certificate or statement of exemption required by Treasury Regulation
Section 1.1441-1, 1.1441-4 or 1.1441-6(c) or any subsequent version thereof or
subsequent revision thereto, properly completed and duly executed by such Bank
establishing that such payment is (a) not subject to United States Federal
withholding tax under the Code because such payment is effectively connected
with conduct by such Bank of a trade or business in the United States or (b)
totally exempt from United States Federal withholding tax, or (other than in the
case of such Bank on the date such Bank became a party to this Credit
Agreement); or (y) if such Bank is not a "bank" within the meaning of Section
881(c)(3)(A) of the Code and cannot deliver either Internal Revenue Service
Form 1001 or 4224, such Bank shall deliver (a) a certificate substantially in
the form of Exhibit J hereto and (b) two completed signed copies of Internal
Revenue Service Form W-8 (or successor form) certifying to such Bank's
entitlement to an exemption for United States withholding tax with respect to
payments of interest to be made under this Credit Agreement or under any
Revolving Credit Note. The Borrower shall not be required to pay any additional
amounts to any Bank pursuant to (S)5.3 or this (S)5.7 to the extent that the
obligation to pay such additional amounts would not have arisen but for a
failure by such Bank to comply with the provisions of the preceding sentence.
Any Bank claiming any additional amounts payable pursuant to (S)5.3 or
this (S)5.7 shall use reasonable efforts (consistent with legal and regulatory
restrictions) to file any certificate or document reasonably requested in
writing by the Borrower or to change the jurisdiction of its applicable lending
office if the making of such a filing or change would avoid the need for or
substantially reduce the amount of any such additional amounts which may
thereafter accrue and would not, in the sole and absolute determination of such
Bank be otherwise disadvantageous to such Bank, which determination by such Bank
shall be conclusive.
If a Bank or the Agent shall become aware that it is entitled to
receive a refund in respect of taxes as to which it has been indemnified by the
Borrower pursuant to (S)5.3 or this (S)5.7, it shall promptly notify the
Borrower of the availability of such refund and shall, within thirty (30) days
after receipt of a request by the Borrower, apply for such refund at the
Borrower's expense. If any Bank or the Agent, as applicable, receives a refund
in respect of any taxes to which it has been indemnified by the Borrower
pursuant to (S)5.3 or this (S)5.7, it shall promptly repay such refund to the
Borrower (to the extent of amounts that have been paid by the Borrower under
(S)5.3 or this (S)5.7 with respect to such refund), net of all out-of-pocket
expenses (including taxes imposed with respect to such refund) of such Bank or
the Agent, as applicable, and without interest; provided, however, that the
Borrower, upon the request of such Bank or the Agent, as applicable, agrees to
return such refund (plus penalties, interest or other charges) to such Bank or
the Agent in the event such Bank or the Agent is required to repay such refund.
5.8. Capital Adequacy. If after the date hereof any Bank or the Agent
determines that (a) the adoption of or change after the Closing Date in any law,
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law) regarding capital requirements for banks or bank
holding companies or
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any change in the interpretation or application thereof by a court or
governmental authority with appropriate jurisdiction, or (b) compliance by such
Bank or the Agent or any corporation controlling such Bank or the Agent with any
law, governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law) of any such entity regarding capital adequacy, has
the effect of reducing the return on such Bank's or the Agent's Commitment with
respect to any Revolving Credit Loans or the Revolving Credit Loans to a level
below that which such Bank or the Agent could have achieved but for such
adoption, change or compliance (taking into consideration such Bank's or the
Agent's then existing policies with respect to capital adequacy and assuming
full utilization of such entity's capital) by any amount deemed by such Bank or
(as the case may be) the Agent to be material, then such Bank or the Agent may
notify the Borrower of such fact. To the extent that the amount of such
reduction in the return on capital is not reflected in the Base Rate, the
Borrower and such Bank shall thereafter attempt to negotiate in good faith,
within thirty (30) days of the day on which the Borrower receives such notice,
an adjustment payable hereunder that will adequately compensate such Bank in
light of these circumstances. If the Borrower and such Bank are unable to agree
to such adjustment within thirty (30) days of the date on which the Borrower
receives such notice, then commencing on the date of such notice (but not
earlier than the effective date of any such increased capital requirement), the
fees payable hereunder shall increase by an amount that will, in such Bank's
reasonable determination, provide adequate compensation. Each Bank shall
allocate such cost increases among its customers in good faith and on an
equitable basis.
5.9. Certificate. A certificate setting forth any additional amounts
payable pursuant to (S)(S)5.7 or 5.8 and a brief explanation of such amounts
which are due, submitted by any Bank or the Agent to the Borrower, shall be
conclusive, absent manifest error, that such amounts are due and owing.
5.10. Indemnity. The Borrower agrees to indemnify each Bank and to hold
each Bank harmless from and against any loss, cost or expense (including loss of
anticipated profits) that such Bank may sustain or incur as a consequence of (a)
default by the Borrower in payment of the principal amount of or any interest on
any Eurodollar Rate Loans as and when due and payable, including any such loss
or expense arising from interest or fees payable by such Bank to lenders of
funds obtained by it in order to maintain its Eurodollar Rate Loans, (b) default
by the Borrower in making a borrowing or conversion after the Borrower has given
(or is deemed to have given) a Loan Request or a Conversion Request relating
thereto in accordance with (S)2.6 or (S)2.7 or (c) the making of any payment of
a Eurodollar Rate Loan or the making of any conversion of any such Revolving
Credit Loan to a Base Rate Loan on a day that is not the last day of the
applicable Interest Period with respect thereto, including interest or fees
payable by such Bank to lenders of funds obtained by it in order to maintain any
such Revolving Credit Loans.
5.11. Interest on Overdue Amounts. Overdue principal and (to the extent
permitted by applicable law) interest on the Revolving Credit Loans and all
other overdue amounts payable hereunder or under any of the other Loan Documents
shall bear interest compounded monthly and payable on demand at a rate per annum
equal
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to two percent (2%) above the Base Rate until such amount shall be paid in full
(after as well as before judgment).
5.12. Replacement Banks. Within thirty (30) days after (a) any Bank has
demanded compensation from the Borrower pursuant to (S)(S)5.7 or 5.8 hereof, or
(b) there shall have occurred a change in law with respect to any Bank as a
consequence of which it shall have become unlawful for such Bank to make a
Eurodollar Rate Loan on any Drawdown Date, as described in (S)5.6 hereof (any
such Bank described in the foregoing clauses (a) or (b) is hereinafter referred
to as an "Affected Bank"), the Borrower may request that the Non-Affected Banks
acquire all, but not less than all, of the Affected Bank's outstanding Revolving
Credit Loans and assume all, but not less than all, of the Affected Bank's
Commitment. If the Borrower so requests, the Non-Affected Banks may elect to
acquire all or any portion of the Affected Bank's outstanding Revolving Credit
Loans and to assume all or any portion of the Affected Bank's Commitment. If the
Non-Affected Banks do not elect to acquire and assume all of the Affected Bank's
outstanding Revolving Credit Loans and Commitment, the Borrower may designate a
replacement bank or banks, which must be satisfactory to the Agent, to acquire
and assume that portion of the outstanding Revolving Credit Loans and Commitment
of the Affected Bank not being acquired and assumed by the Non-Affected Banks.
The provisions of (S)19 hereof shall apply to all reallocations pursuant to this
(S)5.12, and the Affected Bank and any Non-Affected Banks and/or replacement
banks which are to acquire the Revolving Credit Loans and Commitment of the
Affected Bank shall execute and deliver to the Agent, in accordance with the
provisions of (S)19 hereof, such Assignments and Acceptances and other
instruments, including, without limitation, Revolving Credit Notes, as are
required pursuant to (S)19 hereof to give effect to such reallocations. Any Non-
Affected Banks and/or replacement banks which are to acquire the Revolving
Credit Loans and Commitment of the Affected Bank shall be deemed to be Eligible
Assignees for all purposes of (S)19 hereof. On the effective date of the
applicable Assignments and Acceptances, the Borrower shall pay to the Affected
Bank all interest accrued on its Revolving Credit Loans up to but excluding such
date, along with any fees payable to such Affected Bank hereunder up to but
excluding such date.
6. COLLATERAL SECURITY AND GUARANTEES.
----------------------------------
6.1. Security of Borrower and Subsidiaries; Guaranty of Subsidiaries. The
Obligations shall be secured by a perfected first priority security interest in
certain of the assets of the Borrower (including a pledge of the non-voting
capital stock of each of the Borrower's Subsidiaries, including, without
limitation, the Unrestricted Subsidiaries, provided, however, in the event such
Unrestricted Subsidiary has incurred Indebtedness permitted by (S)9.1(p) hereof
and the lender of such Indebtedness has requested a pledge of the non-voting
capital stock of such Unrestricted Subsidiary by the Borrower, the Borrower
shall only be required to grant to the Agent for the benefit of the Banks a
second priority security interest in such non-voting capital stock until such
Indebtedness has been repaid in full) and its Restricted Subsidiaries (other
than AmeriKing Tennessee and AmeriKing Colorado until such time as such Person
is required to become a Guarantor hereunder pursuant to (S)8.17 hereof), whether
now owned or hereafter acquired, pursuant to the terms of
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the Security Documents to which the Borrower and such Restricted Subsidiaries
are parties. The Obligations shall also be secured by a pledge of the non-voting
capital stock of each Unrestricted Subsidiary's Subsidiaries, provided, however,
in the event such Unrestricted Subsidiary has incurred Indebtedness permitted by
(S)9.1(p) hereof and the lender of such Indebtedness has requested a pledge of
the non-voting capital stock of such Unrestricted Subsidiary's Subsidiaries,
such Unrestricted Subsidiary shall only be required to grant to the Agent for
the benefit of the Banks a second priority security interest in such non-voting
capital stock until such Indebtedness has been repaid in full. In addition, the
Obligations shall also be guaranteed by each of the Borrower's Restricted
Subsidiaries other than AmeriKing Tennessee and AmeriKing Colorado (until such
time as such Person is required to become a Guarantor hereunder pursuant to
(S)8.17 hereof) pursuant to the terms of the Guaranty of such Restricted
Subsidiaries, and the Restricted Subsidiaries' obligations under such Guaranty
shall be secured by a perfected first priority security interest in certain of
the assets of such Restricted Subsidiary (including a pledge of the non-voting
capital stock of each of the Restricted Subsidiaries' Subsidiaries), whether now
owned or hereafter acquired, pursuant to the terms of the Security Documents to
which such Restricted Subsidiaries are parties.
6.2. Guaranties and Security of Holdings. Certain of the Obligations shall
also be guaranteed by Holdings pursuant to the terms of the Guaranty. The
Obligations shall be secured by a perfected first priority security interest in
certain of the stock owned by Holdings, pursuant to the terms of the Stock
Pledge Agreement to which Holdings is a party.
7. REPRESENTATIONS AND WARRANTIES.
--------------- --- ----------
Each of the Borrower and, to the extent expressly set forth in this (S)7,
Holdings, represents and warrants to the Banks and the Agent as follows:
7.1. Corporate Authority.
7.1.1. Incorporation; Good Standing. Each of Holdings, the Borrower
and each of their respective Subsidiaries (a) is a corporation duly
organized, validly existing and in good standing under the laws of its
state of incorporation, (b) has all requisite corporate power to own its
property and conduct its business as now conducted and as presently
contemplated, and (c) is in good standing as a foreign corporation and is
duly authorized to do business in each jurisdiction where such
qualification is necessary except where a failure to be so qualified could
not reasonably be expected to have a materially adverse effect on the
business, assets or financial condition of the Borrower or such Subsidiary.
7.1.2. Authorization. The execution, delivery and performance of this
Credit Agreement and the other Loan Documents to which Holdings, the
Borrower or any of their Subsidiaries is or is to become a party and the
transactions contemplated hereby and thereby (a) are within the corporate
authority of such Person, (b) have been duly authorized by all necessary
corporate proceedings, (c) do not conflict with or result in any breach or
contravention of any provision of law, statute, rule or regulation to which
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Holdings, the Borrower or any of their Subsidiaries is subject or any
judgment, order, writ, injunction, license or permit applicable to
Holdings, the Borrower or any of their Subsidiaries, the violation of which
would have a materially adverse effect on the business, assets or financial
condition of Holdings, the Borrower or such Subsidiary and (d) do not
conflict with any provision of the corporate charter or bylaws of, or any
agreement or other instrument binding upon, Holdings, the Borrower or any
of their Subsidiaries.
7.1.3. Enforceability. The execution and delivery of this Credit
Agreement and the other Loan Documents to which Holdings, the Borrower or
any of their Subsidiaries is or is to become a party will result in valid
and legally binding obligations of such Person enforceable against it in
accordance with the respective terms and provisions hereof and thereof,
except as enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting generally
the enforcement of creditors' rights and except to the extent that
availability of the remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceeding therefor
may be brought.
7.2. Governmental Approvals. The execution, delivery and performance by
Holdings, the Borrower and any of their Subsidiaries of this Credit Agreement
and the other Loan Documents, the Permitted Acquisition Documents, if any, and
the Capitalization Documents to which Holdings, the Borrower or any of their
Subsidiaries is or is to become a party and the transactions contemplated hereby
and thereby do not require the approval or consent of, or filing with, any
governmental agency or authority other than those already obtained and are not
in violation of any municipal or other local law, ordinance or governmental rule
or regulation relating to the occupancy or operation of any of the BKC
restaurants, which violation would have a material adverse effect on the
business, assets or financial condition of Holdings, the Borrower and their
Subsidiaries, taken as a whole.
7.3. Title to Properties; Leases. Except as indicated on Schedule 7.3
hereto, Holdings, the Borrower and their Subsidiaries own or lease all of the
assets reflected in the pro forma consolidated balance sheet of Holdings, the
Borrower and their Subsidiaries as at the Balance Sheet Date or acquired since
that date (except property and assets sold or otherwise disposed of in the
ordinary course of business since that date), subject to no rights of others,
including any mortgages, leases, conditional sales agreements, title retention
agreements, liens or other encumbrances except Permitted Liens.
7.4. Financial Statements and Projections.
7.4.1. Financial Statements. There has been furnished to each of the
Banks a pro forma consolidated balance sheet of Holdings, the Borrower and
their Subsidiaries as at the Closing Date, which properly gives effect to
the transactions contemplated hereby. Such balance sheet fairly presents
the financial condition of the Borrower and its Subsidiaries as at the
close of business on the date thereof. There are no contingent liabilities
of Holdings, the Borrower or any of their Subsidiaries as of such date
involving material
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amounts, which were not disclosed in such balance sheet and the notes
related thereto or in this Credit Agreement.
7.4.2. Projections. The projections of the annual operating budgets of
Holdings, the Borrower and their Subsidiaries on a consolidated basis,
including balance sheets and cash flow statements for the 1997 through 2002
fiscal years, copies of which have been delivered to each Bank, disclose
all assumptions made with respect to general economic, financial and market
conditions used in formulating such projections. To the knowledge of
Holdings, the Borrower or any of their Subsidiaries, no facts exist that
(individually or in the aggregate) would result in any material change in
any of such projections. The projections are based upon reasonable
estimates and assumptions, have been prepared on the basis of the
assumptions stated therein and reflect the reasonable estimates of
Holdings, the Borrower and their Subsidiaries of the results of operations
and other information projected therein.
7.5. No Material Changes, etc. (a) Since the Balance Sheet Date there has
occurred no materially adverse change in the assets, financial condition or
business of Holdings, the Borrower and their Subsidiaries as shown on or
reflected in the consolidated balance sheet of Holdings, the Borrower and their
Subsidiaries as at the Balance Sheet Date other than changes in the ordinary
course of business that have not had any materially adverse effect either
individually or in the aggregate on the assets, business or financial condition
of Holdings, the Borrower or any of their Subsidiaries.
(b) Each of Holdings, the Borrower and each of its Subsidiaries (before
and after giving effect to the transactions contemplated by this Credit
Agreement and the other Loan Documents) (i) is solvent, (ii) has assets having a
fair value in excess of its liabilities, (iii) has assets having a fair value in
excess of the amount required to pay its liabilities on existing debts as such
debts become absolute and matured, and (iv) has, and expects to continue to
have, access to adequate capital for the conduct of its business and the ability
to pay its debts from time to time incurred in connection with the operation of
its business as such debts mature.
7.6. Franchises, Patents, Copyrights, etc. Each of the Borrower and its
Subsidiaries possesses all franchises, patents, copyrights, trademarks, trade
names, licenses and permits, and rights in respect of the foregoing, adequate
for the conduct of its business substantially as now conducted without known
conflict with any rights of others.
7.7. Litigation. Except as set forth in Schedule 7.7 hereto, there are no
actions, suits, proceedings or investigations of any kind pending or threatened
against Holdings, the Borrower or any of their Subsidiaries before any court,
tribunal or administrative agency or board that, if adversely determined, might,
either in any case or in the aggregate, materially adversely affect the
properties, assets, financial condition or business of Holdings, the Borrower
and their Subsidiaries or materially impair the right of Holdings, the Borrower
and their Subsidiaries, considered as a whole, to carry on business
substantially as now conducted by them, or result in any substantial liability
not adequately covered by insurance, or for which adequate
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reserves are not maintained on the consolidated balance sheet of Holdings, the
Borrower and their Subsidiaries, or which question the validity of this Credit
Agreement or any of the other Loan Documents, or any action taken or to be taken
pursuant hereto or thereto.
7.8. No Materially Adverse Contracts, etc. None of Holdings, the Borrower
nor any of their Subsidiaries is subject to any charter, corporate or other
legal restriction, or any judgment, decree, order, rule or regulation that has
or is expected in the future to have a materially adverse effect on the
business, assets or financial condition of Holdings, the Borrower or any of
their Subsidiaries. None of Holdings, the Borrower nor any of their Subsidiaries
is a party to any contract or agreement that has or is expected, in the judgment
of the Borrower's officers, to have any materially adverse effect on the
business of Holdings, the Borrower or any of their Subsidiaries considered as a
whole.
7.9. Compliance with Other Instruments, Laws, etc. None of Holdings, the
Borrower nor any of their Subsidiaries is in violation of any provision of its
charter documents, bylaws, or any agreement or instrument to which it may be
subject or by which it or any of its properties may be bound or any decree,
order, judgment, statute, license, rule or regulation, in any of the foregoing
cases in a manner that could result in the imposition of substantial penalties
or materially and adversely affect the financial condition, properties or
business of Holdings, the Borrower or any of their Subsidiaries considered as a
whole.
7.10. Tax Status. Each of Holdings, the Borrower and their Subsidiaries (a)
have made or filed all federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which any of them is
subject, (b) have paid all taxes and other governmental assessments and charges
shown or determined to be due on such returns, reports and declarations, except
those being contested in good faith and by appropriate proceedings and (c) have
set aside on their books provisions reasonably adequate for the payment of all
taxes for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed to
be due by the taxing authority of any jurisdiction, and the officers of the
Borrower know of no basis for any such claim.
7.11. No Event of Default. No Default or Event of Default has occurred and
is continuing.
7.12. Holding Company and Investment Company Acts. None of Holdings, the
Borrower nor any of their Subsidiaries is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company", as
such terms are defined in the Public Utility Holding Company Act of 1935; nor is
it an "investment company", or an "affiliated company" or a "principal
underwriter" of an "investment company", as such terms are defined in the
Investment Company Act of 1940.
7.13. Absence of Financing Statements, etc. Except with respect to
Permitted Liens or as permitted by this Credit Agreement or the Security
Documents, there is no financing statement, security agreement, chattel
mortgage, real estate
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mortgage or other document filed or recorded with any filing records, registry
or other public office, that purports to cover, affect or give notice of any
present or possible future lien on, or security interest in, any assets or
property of Holdings, the Borrower or any of their Subsidiaries or any rights
relating thereto.
7.14. Perfection of Security Interest. All filings, assignments, pledges
and deposits of documents or instruments have been made and all other actions
have been taken that are necessary or advisable, under applicable law, to
establish and perfect the Agent's security interest in the Collateral. The
Collateral and the Agent's rights with respect to the Collateral are not subject
to any setoff, claims, withholdings or other defenses. The Borrower, its
Subsidiaries or Holdings, as the case may be, is the owner of the Collateral
free from any lien, security interest, encumbrance and any other claim or
demand, except for Permitted Liens.
7.15. Certain Transactions. Except as set forth on Schedule 7.15 hereto,
and for arm's length transactions pursuant to which Holdings, the Borrower or
any of their Subsidiaries makes payments in the ordinary course of business upon
terms no less favorable than Holdings, the Borrower or such Subsidiary could
obtain from third parties, none of the officers, directors, or employees of
Holdings, the Borrower or any of their Subsidiaries is presently a party to any
transaction with Holdings, the Borrower or any of their Subsidiaries (other than
for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Borrower, any corporation, partnership, trust or other entity
in which any officer, director, or any such employee has a substantial interest
or is an officer, director, trustee or partner.
7.16. Employee Benefit Plans.
7.16.1. In General. Each Employee Benefit Plan has been maintained
and operated in compliance in all material respects with the provisions of
ERISA and, to the extent applicable, the Code, including but not limited to
the provisions thereunder respecting prohibited transactions.
7.16.2. Terminability of Welfare Plans. Under each Employee Benefit
Plan which is an employee welfare benefit plan within the meaning of
(S)3(1) or (S)3(2)(B) of ERISA, no benefits are due unless the event giving
rise to the benefit entitlement occurs prior to plan termination (except as
required by Title I, Part 6 of ERISA). The Borrower or an ERISA Affiliate,
as appropriate, may terminate each such Plan at any time (or at any time
subsequent to the expiration of any applicable bargaining agreement) in the
discretion of the Borrower or such ERISA Affiliate without liability to any
Person.
7.16.3. Guaranteed Pension Plans. Each contribution required to be
made to a Guaranteed Pension Plan, whether required to be made to avoid the
incurrence of an accumulated funding deficiency, the notice or lien
provisions of (S)302(f) of ERISA, or otherwise, has been timely made. No
waiver of an accumulated funding deficiency or extension of amortization
periods has been
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received with respect to any Guaranteed Pension Plan. No liability to the
PBGC (other than required insurance premiums, all of which have been paid)
has been incurred by the Borrower or any ERISA Affiliate with respect to
any Guaranteed Pension Plan and there has not been any ERISA Reportable
Event, or any other event or condition which presents a material risk of
termination of any Guaranteed Pension Plan by the PBGC. Based on the latest
valuation of each Guaranteed Pension Plan (which in each case occurred
within twelve months of the date of this representation), and on the
actuarial methods and assumptions employed for that valuation, the
aggregate benefit liabilities of all such Guaranteed Pension Plans within
the meaning of (S)4001 of ERISA did not exceed the aggregate value of the
assets of all such Guaranteed Pension Plans, disregarding for this purpose
the benefit liabilities and assets of any Guaranteed Pension Plan with
assets in excess of benefit liabilities.
7.16.4. Multiemployer Plans. Neither the Borrower nor any ERISA
Affiliate has incurred any material liability (including secondary
liability) to any Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan under (S)4201 of ERISA or as a
result of a sale of assets described in (S)4204 of ERISA. Neither the
Borrower nor any ERISA Affiliate has been notified that any Multiemployer
Plan is in reorganization or insolvent under and within the meaning of
(S)4241 or (S)4245 of ERISA or that any Multiemployer Plan intends to
terminate or has been terminated under (S)4041A of ERISA.
7.17. Regulations G, U and X. The proceeds of the Revolving Credit Loans
shall be used (a) to convert existing Indebtedness to the Banks under the
Original Credit Agreement to Revolving Credit Loans and Letters of Credit, as
the case may be, hereunder, (b) to finance all or any portion of the Permitted
Financed Acquisitions and (c) for working capital and general corporate
purposes. The Borrower will obtain Letters of Credit solely for working capital
and general corporate purposes. No portion of any Revolving Credit Loan is to be
used, and no portion of any Letter of Credit is to be obtained, for the purpose
of purchasing or carrying any "margin security" or "margin stock" as such terms
are used in Regulations G, U and X of the Board of Governors of the Federal
Reserve System, 12 C.F.R. Parts 221 and 224.
7.18. Environmental Compliance. To the best of the Borrower's knowledge,
except as disclosed on Schedule 7.18 attached hereto:
(a) none of the Borrower, its Subsidiaries or any operator of the
Real Estate or any operations thereon is in violation, nor has the Borrower
or any of its Subsidiaries received notice that it, or any operator of the
Real Estate is in alleged violation, of any judgment, decree, order, law,
license, rule or regulation pertaining to environmental matters, including
without limitation, those arising under the Resource Conservation and
Recovery Act ("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 as amended ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"), the Federal Clean
Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, or
any state or local statute, regulation, ordinance, order or decree relating
to health, safety or the environment
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(hereinafter "Environmental Laws"), which violation would have a material
adverse effect on the environment or the business, assets or financial
condition of the Borrower and its Subsidiaries considered as a whole;
(b) neither the Borrower nor any of its Subsidiaries has received
notice from any third party including, without limitation: any federal,
state or local governmental authority: (i) that any one of them has been
identified by the United States Environmental Protection Agency ("EPA") as
a potentially responsible party under CERCLA with respect to a site listed
on the National Priorities List, 40 C.F.R. Part 300 Appendix B (1986); (ii)
that any hazardous waste, as defined by 42 U.S.C. (S)6903(5), any hazardous
substances as defined by 42 U.S.C. (S)9601(14), any pollutant or
contaminant as defined by 42 U.S.C. (S)9601(33) and any toxic substances,
oil or hazardous materials or other chemicals or substances regulated by
any Environmental Laws ("Hazardous Substances") which any one of them has
generated, transported or disposed of has been found at any site at which a
federal, state or local agency or other third party has conducted or has
ordered that the Borrower or any of its Subsidiaries conduct a remedial
investigation, removal or other response action pursuant to any
Environmental Law; or (iii) except to the extent that the following would
not have a material adverse effect on the business, assets of financial
condition of the Borrower and its Subsidiaries, taken as a whole, that it
is or shall be a named party to any claim, action, cause of action,
complaint, or legal or administrative proceeding (in each case, contingent
or otherwise) arising out of any third party's incurrence of costs,
expenses, losses or damages of any kind whatsoever in connection with the
release of Hazardous Substances;
(c) (i) no portion of the Real Estate has been used for the handling,
processing, storage or disposal of Hazardous Substances other than in
accordance with applicable Environmental Laws the noncompliance with which
would have a material adverse effect on the business, assets or financial
condition of the Borrower and its Subsidiaries, taken as a whole; and no
underground tank or other underground storage receptacle for Hazardous
Substances is located on any portion of the Real Estate in violation of any
applicable Environmental Law the noncompliance with which would have a
material adverse effect on the business, assets or financial condition of
the Borrower and its Subsidiaries, taken as a whole; (ii) in the course of
any activities conducted by the Borrower, its Subsidiaries or operators of
such Person's properties, no Hazardous Substances have been generated or
are being used on the Real Estate except in accordance (in all material
respects) with applicable Environmental Laws the noncompliance with which
would have a material adverse effect on the business, assets or financial
condition of the Borrower and its Subsidiaries, taken as a whole; (iii)
there have been no releases (i.e. any past or present releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, disposing or dumping) or threatened releases of Hazardous
Substances on, upon, into or from the properties of the Borrower or its
Subsidiaries, which releases would have a material adverse effect on the
value of any of the business, assets or financial condition of the Borrower
and its Subsidiaries, taken as a whole; (iv) there have
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been no releases on, upon, from or into any real property in the vicinity
of any of the Real Estate which, through soil or groundwater contamination,
may have come to be located on any of the Real Estate, and which would have
a material adverse effect on the business, assets or financial condition of
the Borrower and its Subsidiaries, taken as a whole and (v) in addition,
except to the extent that the following would not have a materially adverse
effect on the business, assets, or financial conditions of the Borrower and
its Subsidiaries, taken as a whole any Hazardous Substances that have been
generated on any of the Real Estate have been transported offsite only by
carriers having an identification number issued by the EPA, treated or
disposed of only by treatment or disposal facilities maintaining valid
permits as required under applicable Environmental Laws, which transporters
and facilities have been and are operating in compliance with such permits
and applicable Environmental Laws; and
(d) none of the Borrower and its Subsidiaries, or any of the Real
Estate is subject to any applicable environmental law requiring the
performance of Hazardous Substances site assessments, or the removal or
remediation of Hazardous Substances, or the giving of notice to any
governmental agency or the recording or delivery to other Persons of an
environmental disclosure document or statement by virtue of the
transactions set forth herein and contemplated hereby.
7.19. Subsidiaries, etc. As of the Closing Date, the Borrower's
Subsidiaries are AmeriKing Colorado, AmeriKing Tennessee, AmeriKing Cincinnati,
AmeriKing Illinois and AmeriKing Virginia, each of which is a wholly-owned
Subsidiary of the Borrower. Holdings is the record and beneficial owner of 100%
of the outstanding capital stock of the Borrower. Except as set forth on
Schedule 7.19 hereto, neither the Borrower nor any Subsidiary of the Borrower is
engaged in any joint venture or partnership with any other Person.
7.20.Chief Executive Offices. Each of the Borrower's and Holdings' chief
executive office is at 2215 Enterprise Drive, Suite 1502, Westchester, Illinois
60154, at which location its books and records are kept. The chief executive
office of each Subsidiary is as set forth on Schedule 7.20 hereto.
7.21. Fiscal Year. Each of Holdings and the Borrower has a fiscal year
which is the twelve (12) months ending on the date set forth opposite the
respective years on Schedule 7.21 attached hereto.
7.22. No Amendments to Certain Documents. Neither the Borrower nor its
Subsidiaries has amended any of the Capitalization Documents in any material
respect. Each of the representations and warranties made by the Borrower and its
Subsidiaries in any of the Loan Documents, Subordination Documents and the
Capitalization Documents was true and correct in all material respects when made
and continues to be true and correct in all material respects on the Closing
Date, except to the extent that any of such representations and warranties
relate, by the express terms thereof, solely to a date falling prior to the
Closing Date, and except to the extent that any of such representations and
warranties may have been affected by the
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consummation of the transactions contemplated and permitted or required by the
Loan Documents.
7.23. Disclosure All factual information (other than financial projections)
furnished by Holdings, the Borrower or any of their Subsidiarires, including
without limitation, all representations and warranties made by Holdings, the
Borrower or any of their Subsidiaries in this Credit Agreement or in any
agreement, instrument, document, certificate, statement or letter furnished to
the Agent or any Bank by or on behalf of Holdings, the Borrower or any of their
Subsidiaries in connection with any of the transactions contemplated by any of
the Loan Documents, is true and accurate in all material respects and does not
contain any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained therein not misleading
in light of the circumstances in which they are made. There is no fact known to
Holdings or the Borrower as of the Closing Date (other than general economic and
political conditions affecting business generally) which materially adversely
affects, or which is reasonably likely to in the future materially adversely
affect, the financial position, business, operations, or affairs of Holdings,
the Borrower and their respective Subsidiaries taken as a whole.
7.24. Insurance. The Borrower and each of its Subsidiaries maintains with
financially sound and reputable insurers insurance with respect to its
properties and businesses against such casualties and contingencies as are in
accordance with general practices and businesses engaged in similar activities
and similar geographic areas, with the details of such coverage being more fully
described on Schedule 7.24 hereto.
8. AFFIRMATIVE COVENANTS OF THE BORROWER.
-------------------------------------
Each of Holdings and the Borrower covenant and agree that, so long as any
Revolving Credit Loan, Unpaid Reimbursement Obligation, Letter of Credit or
Revolving Credit Note is outstanding or any Bank has any obligation to make any
Revolving Credit Loans or the Agent has any obligation to issue, extend or renew
any Letters of Credit:
8.1. Punctual Payment. The Borrower will duly and punctually pay or cause
to be paid the principal and interest on the Revolving Credit Loans, all
Reimbursement Obligations, the Letter of Credit Fees, the commitment fees, the
Agent's Fee and all other amounts provided for in this Credit Agreement and the
other Loan Documents to which the Borrower or any of its Subsidiaries is a
party, all in accordance with the terms of this Credit Agreement and such other
Loan Documents.
8.2. Maintenance of Office. Each of Holdings and the Borrower will maintain
its chief executive office at 2215 Enterprise Drive, Suite 1502, Westchester,
Illinois 60154, or at such other place in the United States of America as the
Borrower shall designate upon written notice to the Agent, where notices,
presentations and demands to or upon Holdings or the Borrower in respect of the
Loan Documents to which Holdings or the Borrower is a party may be given or
made.
8.3 Records and Accounts. Each of Holdings and the Borrower will (a) keep,
and cause each of its Subsidiaries to keep, true and accurate records and books
of
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account in which full, true and correct entries will be made in accordance with
generally accepted accounting principles and (b) maintain adequate accounts and
reserves for all taxes (including income taxes), depreciation, depletion,
obsolescence and amortization of its properties and the properties of its
Subsidiaries, contingencies, and other reserves.
8.4. Financial Statements, Certificates and Information. The Borrower will
deliver to the Agent, with sufficient copies for each of the Banks:
(a) as soon as practicable, but in any event not later than ninety
(90) days after the end of each fiscal year of Holdings and the Borrower,
(i) the consolidated balance sheet of Holdings and its Subsidiaries as at
the end of such year, and the related consolidated statement of income and
consolidated statement of cash flow for such year, each setting forth in
comparative form the figures for the previous fiscal year and all such
consolidated statements to be in reasonable detail, prepared in accordance
with generally accepted accounting principles, and certified without
qualification by Deloitte & Touche or by other independent certified public
accountants satisfactory to the Agent, and (ii) the unaudited consolidating
balance sheet of Holdings and its Subsidiaries as at the end of such year,
and the related unaudited consolidating statement of income and unaudited
consolidating statements of cash flow for such year, each setting forth in
comparative form the figures for the previous fiscal year and all such
consolidating statements to be in reasonable detail, prepared by management
in accordance with the past financial practice of Holdings and its
Subsidiaries and that the information contained in such financial
statements fairly presents the financial position of Holdings and its
Subsidiaries on the date thereof and for the fiscal period then ended;
(b) as soon as practicable, but in any event not later than forty-
five (45) days after the end of each of the fiscal quarters of the
Borrower, copies of the unaudited consolidated and consolidating balance
sheets of Holdings and its Subsidiaries each as at the end of such quarter,
and the related consolidated and consolidating statements of income and
consolidated and consolidating statements of cash flow for the portion of
Holdings' fiscal year then elapsed, each setting forth in comparative form
the figures for the previous fiscal year and a comparison setting forth the
corresponding figures from the budgeted or projected figures set forth in
the projections described in (S)7.4 hereof for such period and all in
reasonable detail and prepared in accordance with generally accepted
accounting principles, and in each case together with a certification by
the principal financial or accounting officer of the Borrower that the
information contained in such financial statements fairly presents the
financial position of Holdings and its Subsidiaries on the date thereof and
for the fiscal period then ended (subject to year-end adjustments);
(c) as soon as practicable, but in any event within thirty (30) days
after the end of each month in each fiscal year of the Borrower, unaudited
monthly consolidated and consolidating financial statements of Holdings and
its Subsidiaries for such month, each setting forth in comparative form the
figures for the previous fiscal year and a comparison setting forth the
corresponding
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figures from the budgeted or projected figures set forth in the projections
described in (S)7.4 for such period, prepared in accordance with generally
accepted accounting principles, together with a certification by the
principal financial or accounting officer of the Borrower that the
information contained in such financial statements fairly presents the
financial condition of Holdings and its Subsidiaries on the date thereof
and for the fiscal period then ended (subject to year-end adjustments);
(d) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a statement certified by the
principal financial or accounting officer of the Borrower in substantially
the form of Exhibit D (the "Compliance Certificate") hereto and setting
forth in reasonable detail computations evidencing compliance with the
covenants contained in (S)10 and (if applicable) reconciliations to reflect
changes in generally accepted accounting principles since the Balance Sheet
Date;
(e) contemporaneously with the filing or mailing thereof, copies of
all material of a financial nature filed with the Securities and Exchange
Commission or sent to the stockholders of Holdings or the Borrower;
(f) not later than the beginning of each fiscal year of the Borrower,
projections of Holdings, the Borrower and their Subsidiaries updating those
projections delivered to the Banks and referred to in (S)7.4.2 or, if
applicable, updating any later such projections delivered pursuant to this
(S)8.4(f);
(g) contemporaneously with the delivery thereof, copies of all
accountants' management letters delivered to Holdings, the Borrower or any
of their Subsidiaries; and
(h) from time to time such other financial data and information as
the Agent or any Bank may reasonably request.
The Banks and the Agent agree that they will treat in confidence all financial
information with respect to Holdings and its Subsidiaries which has not become
public, and will not, without the consent of the Borrower, disclose such
information to any third party (other than an affiliate of such Bank or the
Agent), and, if any representative or agent of the Banks or the Agent shall not
be an employee of one of the Banks or the Agent or any affiliate of the Banks or
the Agent, such designee shall be reputable and of recognized standing and shall
agree to treat in confidence the information obtained during any such inspection
and, without the prior written consent of the Borrower, not to disclose such
information to any third party or make use of such information for personal
gain, it being agreed that such confidential information is intended to be used
primarily in connection with the evaluation of the performance of Holdings, the
Borrower and their Subsidiaries by the Banks under the Loan Documents and the
enforcement of rights and obligations under the Loan Documents, and are not to
be used for the purpose of evaluating whether to extend credit to or advise any
direct competitor of the Borrower. Notwithstanding the foregoing, the Borrower
hereby authorizes the Agent and each of the Banks to disclose information
obtained pursuant to this Credit Agreement which has not become public
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to banks or other financial institutions who are participants or assignees or
potential participants or assignees of the Revolving Credit Loans and/or Letters
of Credit made or to be made hereunder with the Borrower's consent not to be
unreasonably withheld, and where required or requested by governmental or
regulatory authorities.
8.5. Notices.
8.5.1. Defaults. The Borrower will give notice in writing to the Agent
promptly (but in no event later than five (5) days) of becoming aware of
the occurrence of any Default or Event of Default. If any Person shall give
any notice or take any other action in respect of a claimed default
(whether or not constituting an Event of Default) under this Credit
Agreement or any other note, evidence of indebtedness, indenture or other
obligation to which or with respect to which the Borrower or any of its
Subsidiaries is a party or obligor, whether as principal, guarantor, surety
or otherwise, the Borrower shall forthwith give written notice thereof to
the Agent and each of the Banks, describing the notice or action and the
nature of the claimed default.
8.5.2. Environmental Events. The Borrower will promptly give notice to
the Agent and each of the Banks (a) of any violation of any Environmental
Law that the Borrower or any of its Subsidiaries reports in writing or is
reportable by such Person in writing (or for which any written report
supplemental to any oral report is made) to any federal, state or local
environmental agency and (b) upon becoming aware thereof, of any inquiry,
proceeding, investigation, or other action, including a notice from any
agency of potential environmental liability, or any federal, state or local
environmental agency or board, that has the potential to materially affect
the assets, liabilities, financial conditions or operations of the Borrower
or any of its Subsidiaries, or the Agent's security interests pursuant to
the Security Documents.
8.5.3. Notification of Claim against Collateral. The Borrower will,
immediately upon becoming aware thereof, notify the Agent and each of the
Banks in writing of any setoff, claims (including, with respect to the Real
Estate, environmental claims), withholdings or other defenses
(collectively, the "Collateral Claims") to which any of the Collateral, or
the Agent's rights with respect to the Collateral, are subject if the
amount of such Collateral Claim is in excess of $2,000,000 in the
aggregate.
8.5.4. Notice of Litigation and Judgments. Each of Holdings and the
Borrower will, and will cause each of its Subsidiaries to, give notice to
the Agent and each of the Banks in writing within ten (10) Business Days of
becoming aware of any litigation or proceedings threatened in writing or
any pending litigation and proceedings affecting Holdings, the Borrower or
any of their Subsidiaries or to which Holdings, the Borrower or any of
their Subsidiaries is or becomes a party involving an uninsured claim of
more than $5,000,000 against Holdings, the Borrower or any of their
Subsidiaries that could reasonably be expected to have a materially adverse
effect on Holdings, the Borrower or any of their Subsidiaries and stating
the nature and status of such litigation or proceedings. Each of Holdings
and the Borrower will, and will
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cause each of its Subsidiaries to, give notice to the Agent and each of the
Banks, in writing, in form and detail satisfactory to the Agent, within ten
(10) Business Days of any judgment not covered by insurance, final or
otherwise, against the Borrower or any of its Subsidiaries in an amount in
excess of $2,000,000.
8.6. Corporate Existence; Maintenance of Properties. Each of Holdings and
the Borrower will do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence, rights and franchises and
those of its Subsidiaries except as permitted under (S)9.5.1 hereof or the
dissolution of any Subsidiary of the Borrower whose operation has been
discontinued if such dissolution is, in the judgment of the Borrower, desirable
in the conduct of its business and does not materially adversely affect the
business of the Borrower and its Subsidiaries on a consolidated basis. Each (a)
will cause all of its properties and those of its Subsidiaries used or useful in
the conduct of its business or the business of its Subsidiaries to be maintained
and kept in good condition, repair and working order and supplied with all
necessary equipment, (b) will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
Holdings and the Borrower may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times,
and (c) will, and will cause each of its Subsidiaries to, continue to engage
primarily in the businesses now conducted by them and in related businesses;
provided that nothing in this (S)8.6 shall prevent Holdings or the Borrower from
discontinuing the operation and maintenance of any of its properties or any of
those of its Subsidiaries if such discontinuance is, in the judgment of Holdings
or the Borrower, as the case may be, desirable in the conduct of its or their
business and does not in the aggregate materially adversely affect the business
of Holdings, the Borrower and their Subsidiaries on a consolidated basis.
8.7. Insurance. The Borrower will, and will cause each of its Subsidiaries
to, maintain with financially sound and reputable insurers insurance with
respect to its properties and business against such casualties and contingencies
as shall be in accordance with the general practices of businesses engaged in
similar activities in similar geographic areas and in amounts, containing such
terms, in such forms and for such periods as may be reasonable and prudent and
in accordance with the terms of the Security Agreement and Schedule 7.24.
8.8. Taxes. Each of Holdings and the Borrower will, and will cause each of
its Subsidiaries to, duly pay and discharge, or cause to be paid and discharged,
before the same shall become overdue, all taxes, assessments and other
governmental charges imposed upon it and its real properties, sales and
activities, or any part thereof, or upon the income or profits therefrom, as
well as all claims for labor, materials, or supplies that if unpaid might by law
become a lien or charge upon any of its property; provided that any such tax,
assessment, charge, levy or claim need not be paid if the validity or amount
thereof shall currently be contested in good faith by appropriate proceedings
and if Holdings, the Borrower or such Subsidiary shall have set aside on its
books adequate reserves with respect thereto; and provided further that
Holdings, the Borrower and each Subsidiary of Holdings and the Borrower will pay
all such
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taxes, assessments, charges, levies or claims forthwith upon the commencement of
proceedings to foreclose any lien that may have attached as security therefor.
8.9. Inspection of Properties and Books, etc.
8.9.1. General. Each of Holdings and the Borrower shall permit the
Banks, through the Agent or any of the Banks' other designated
representatives, to (a) visit and inspect any of the properties of
Holdings, the Borrower or any of their Subsidiaries, (b) to examine the
books of account of the Borrower and their Subsidiaries (and to make copies
thereof and extracts therefrom), (c) to discuss the affairs, finances and
accounts of Holdings, the Borrower and their Subsidiaries with, and to be
advised as to the same by, its and their officers, all at such reasonable
times during normal business hours and at such reasonable intervals as the
Agent or any Bank may reasonably request and (d) conduct commercial finance
examinations and appraisals of assets, all at such reasonable times during
normal business hours and such reasonable intervals as the Agent or any
Bank may reasonably request. Each of the Banks agrees that it will treat in
confidence the information obtained during any inspection which is
designated by the Borrower as confidential and will not, without the
consent of the Borrower disclose such information to any third party and,
if any representative or agent of any Bank or the Agent shall not be an
employee of such Bank or the Agent, as the case may be, or any affiliate of
such Bank or the Agent, as the case may be, such designee shall be
reputable and of recognized standing and shall agree in writing to treat in
confidence the information obtained during any such inspection and, without
the prior written consent of the Borrower, not to disclose such information
to any third party or make use of such information for personal gain.
Notwithstanding the foregoing, the Banks and the Agent may disclose
information obtained pursuant to this Credit Agreement to other banks or
financial institutions who are potential participants or potential
assignees or participants in the Revolving Credit Loans made or to be made
hereunder with the Borrower's consent, not to be unreasonably withheld, and
where required or requested by governmental or regulatory authorities.
8.9.2. Communications with Accountants. Each of Holdings and the
Borrower authorizes the Agent and, if accompanied by the Agent, the Banks
to communicate directly with Holdings' and the Borrower's independent
certified public accountants and authorizes such accountants to disclose to
the Agent and the Banks any and all financial statements and other
supporting financial documents and schedules including copies of any
management letter with respect to the business, financial condition and
other affairs of Holdings, the Borrower or any of their Subsidiaries. At
the request of the Agent, the Borrower shall deliver a letter addressed to
such accountants instructing them to comply with the provisions of this
(S)8.9.2.
8.9.3. Environmental Assessments. The Agent may, from time to time,
in its discretion, obtain one or more environmental assessments or audits
of any Mortgaged Property prepared by a hydrogeologist, an independent
engineer or other qualified consultant or expert approved by the Agent to
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evaluate or confirm (a) whether any Hazardous Materials are present in the
soil or water at such Mortgaged Property and (b) whether the use and
operation of such Mortgaged Property complies with all Environmental Laws.
Environmental assessments may include detailed visual inspections of such
Mortgaged Property including any and all storage areas, storage tanks,
drains, dry wells, and leaching areas, and the taking of soil samples,
surface water samples and ground water samples, as well as such other
investigations or analysis as the Agent deems appropriate. The Agent shall
provide the Borrower with written notice prior to beginning any such
assessment and shall provide the Borrower with reasonable detail as to the
scope of work to be conducted. In addition, the Borrower shall be given the
option to conduct such assessments on behalf of the Agent, provided the
Borrower commences and completes such assessments within a reasonable time
of the request by the Agent for such assessment. Except after the
occurrence and during the continuance of an Event of Default pursuant to
(S)13.1(a) or (b), all such environmental assessments shall be conducted
and made at the expense of the Banks.
8.10. Compliance with Laws, Contracts, Licenses, and Permits. Each of
Holdings and the Borrower will, and will cause each of its Subsidiaries to,
comply with (a) the applicable laws and regulations wherever its business is
conducted, including all Environmental Laws the noncompliance with which would
have a material adverse affect on the business, assets or financial condition of
Holdings, the Borrower and their Subsidiaries considered as a whole or the
ability of Holdings or the Borrower or any of their Subsidiaries to fulfill its
obligations under this Credit Agreement or the other Loan Documents to which
such Person is a party, (b) the provisions of its charter documents and by-laws,
(c) all agreements and instruments by which it or any of its properties may be
bound, including, without limitation, all leases and Franchise Agreements, the
noncompliance with which could have a material adverse effect on the business,
assets or financial condition of Holdings, the Borrower and their Subsidiaries
considered as a whole or the ability of Holdings or the Borrower or any of their
Subsidiaries to fulfill its obligations under this Credit Agreement or the other
Loan Documents to which such Person is a party, and (d) all applicable decrees,
orders, and judgments the noncompliance with which could have a material adverse
affect on the business, assets or financial condition of Holdings, the Borrower
and their Subsidiaries considered as a whole or the ability of Holdings or the
Borrower or any of their Subsidiaries to fulfill its obligations under this
Credit Agreement or the other Loan Documents to which such Person is a party. If
any authorization, consent, approval, permit or license from any officer, agency
or instrumentality of any government shall become necessary or required in order
that Holdings, the Borrower or any of their Subsidiaries may fulfill any of its
obligations hereunder or any of the other Loan Documents to which such Person is
a party, Holdings or the Borrower will, or (as the case may be) will cause such
Subsidiary to, immediately take or cause to be taken all reasonable steps within
the power of such Person to obtain such authorization, consent, approval, permit
or license and furnish the Agent and the Banks with evidence thereof.
8.11. Employee Benefit Plans. Each of Holdings and the Borrower will (a)
promptly upon filing the same with the Department of Labor or Internal Revenue
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Service upon request of the Agent, furnish to the Agent a copy of the most
recent actuarial statement required to be submitted under (S)103(d) of ERISA and
Annual Report, Form 5500, with all required attachments, in respect of each
Guaranteed Pension Plan and (b) promptly upon receipt or dispatch, furnish to
the Agent any notice, report or demand sent or received in respect of a
Guaranteed Pension Plan under (S)(S)302, 4041, 4042, 4043, 4063, 4065, 4066 and
4068 of ERISA, or in respect of a Multiemployer Plan, under (S)(S)4041A, 4202,
4219, 4242, or 4245 of ERISA.
8.12. Use of Proceeds. The Borrower will use the proceeds of the Revolving
Credit Loans (a) to finance the Permitted Financed Acquisitions, (b) to convert
existing Indebtedness to the Banks under the Original Credit Agreement to
Revolving Credit Loans or Letters of Credit, as the case may be, hereunder and
(c) and for general corporate and working capital purposes. The Borrower will
obtain Letters of Credit solely for general corporate and working capital
purposes.
8.13. Fair Labor Standards Act. Each of Holdings and the Borrower will, and
each of their Subsidiaries shall at all times operate its business in compliance
with all material applicable provisions of the Fair Labor Standards Act of 1938,
as amended. None of the inventory of Holdings, the Borrower or any of their
Subsidiaries are or will be produced by employees of (a) Holdings, the Borrower
or any of their Subsidiaries or (b) to the best knowledge of Holdings, the
Borrower and each of their Subsidiaries, by employees of suppliers, who are, in
each case, employed in violation of the minimum wage or maximum hour provisions
of the Fair Labor Standards Act (29 U.S.C. (S)(S)206 and 207) or any regulations
promulgated thereunder, in each case, as in effect from time to time.
8.14. Further Assurances. Each of Holdings and the Borrower will, and will
cause each of its Subsidiaries to, cooperate with the Banks and the Agent and
execute such further instruments and documents as the Banks or the Agent shall
reasonably request to carry out to their satisfaction the transactions
contemplated by this Credit Agreement and the other Loan Documents.
8.15. Mortgaged Property. If, after the Closing Date, the Borrower or any
of its Restricted Subsidiaries acquires in any one transaction or a series of
related transactions real estate with either a fair market value or acquisition
price of more than $2,000,000, and the Borrower or such Restricted Subsidiary,
as the case may be, does not sell such real property pursuant to the terms and
conditions set forth in (S)9.5.2(f) hereof or refinance the purchase price of
such real property pursuant to the terms and conditions set forth in (S)9.1(o)
hereof in either case within 180 days of acquiring such real property, the
Borrower or such Restricted Subsidiary, as the case may be, shall forthwith
deliver to the Agent, if the Agent so requests, a fully executed mortgage or
deed of trust over such real estate (which shall exclude fixtures, furniture and
equipment), in form and substance satisfactory to the Agent, together with title
insurance policies, surveys, evidences of insurance with the Agent named as loss
payee and additional insured, legal opinions and other documents and
certificates with respect to such real estate consistent with the Mortgages and
related documents delivered hereunder. In addition, if, after the Closing Date,
the Borrower or any of its Restricted Subsidiaries leases any real estate and,
immediately after giving effect to
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such lease, a single landlord and/or its affiliates other than BKC owns twenty
(20) or more pieces of real property leased to the Borrower or any of the
Restricted Subsidiaries, the Borrower or such Restricted Subsidiary, as the case
may be, shall use commercially reasonable efforts to obtain and deliver to the
Agent, if the Agent so requests, a fully executed leasehold mortgage or
leasehold deed of trust over all such real estate (which shall exclude fixtures,
furniture and equipment) owned by such landlord and/or its affiliates, in form
and substance satisfactory to the Agent, together with title insurance policies,
surveys, evidences of insurance with the Agent named as loss payee and
additional insured, legal opinions and other documents and certificates with
respect to such real estate consistent with the Mortgages and related documents
delivered hereunder. The Borrower further agrees that, following the taking of
any such actions with respect to such real estate, the Agent shall have for the
benefit of the Banks and the Agent a valid and enforceable first priority
mortgage or deed of trust over such real estate, free and clear of all defects
and encumbrances except for Permitted Liens.
8.16. Class of Stock. Each of the Borrower and its Subsidiaries shall at
all times have a voting class of capital stock and a non-voting class of capital
stock, provided that not less than ninety-five percent (95%) of the value of the
Borrower or such Subsidiary, as the case may be, shall be represented by the
non-voting class of capital stock.
8.17. Guarantees of AmeriKing Tennessee and AmeriKing Colorado. The
Borrower will cause each of AmeriKing Tennessee and AmeriKing Colorado to become
a Guarantor hereunder, and execute and deliver to the Agent all Security
Documents which would otherwise be required from a Restricted Subsidiary at the
earliest practicable date, but not later than 60 days following the earlier to
occur of (a) the repayment of all Indebtedness incurred by each such Subsidiary
prior to the Closing Date and (b) the date on which any agreement, document or
instrument which otherwise prohibits such Subsidiary from being a Guarantor
hereunder and pledging its assets to the Agent no longer contains such
prohibitions.
9. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
------- -------- --------- -- --- ---------
Each of Holdings and the Borrower covenant and agree that, so long as any
Revolving Credit Loan, Unpaid Reimbursement Obligation, Letter of Credit or
Revolving Credit Note is outstanding or any Bank has any obligation to make any
Revolving Credit Loans or the Agent has any obligations to issue, extend or
renew any Letters of Credit:
9.1. Restrictions on Indebtedness. Each of Holdings and the Borrower will
not, and will not permit any of its Subsidiaries to, create, incur, assume,
guarantee or be or remain liable, contingently or otherwise, with respect to any
Indebtedness other than:
(a) Indebtedness to the Banks and the Agent arising under any of the
Loan Documents;
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(b) current liabilities of Holdings, the Borrower or such Subsidiary
incurred in the ordinary course of business not incurred through (i) the
borrowing of money, or (ii) the obtaining of credit except for credit on an
open account basis customarily extended and in fact extended in connection
with normal purchases of goods and services;
(c) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies to the
extent that payment therefor shall not at the time be required to be made
in accordance with the provisions of (S)8.8;
(d) Indebtedness in respect of judgments or awards that have been in
force for less than the applicable period for taking an appeal so long as
execution is not levied thereunder and Holdings, the Borrower or such
Subsidiary shall at the time in good faith be prosecuting an appeal or
proceedings for review and in respect of which a stay of execution shall
have been obtained pending such appeal or review;
(e) endorsements for collection, deposit or negotiation and warranties
of products or services, in each case incurred in the ordinary course of
business;
(f) Subordinated Debt;
(g) Indebtedness consisting of (i) unsecured Indebtedness of Holdings,
the Borrower and the Restricted Subsidiaries not otherwise permitted
hereunder, (ii) obligations of Holdings, the Borrower and the Restricted
Subsidiaries under Capitalized Leases, and (iii) purchase money
Indebtedness incurred in connection with the acquisition after the date
hereof of any real or personal property by Holdings, the Borrower or such
Restricted Subsidiary in an amount not to exceed $15,000,000 in the
aggregate, provided that neither Holdings, the Borrower nor such Restricted
Subsidiary shall be permitted to finance more than eighty percent (80%) of
the purchase price of the property acquired, and further provided, that the
aggregate principal amount of all such Indebtedness permitted under this
clause (g) shall not exceed $20,000,000 outstanding at any one time;
(h) Indebtedness existing on the date hereof and listed and described
on Schedule 9.1 hereto;
(i) Indebtedness in respect of interest rate protection arrangements
so long as such arrangements are purchased from or issued by any of the
Banks;
(j) Indebtedness in respect of performance, surety, statutory, appeal
or similar bonds obtained in the ordinary course of business;
(k) Indebtedness to BKC arising under the Franchise Agreements or the
Leases (including, but not limited to, (i) any guaranty by Holdings of the
Borrower's obligations to BKC under the Franchise Agreements or the Leases
or (ii) any guaranty by the Borrower or a Restricted Subsidiary of another
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Restricted Subsidiary's obligations to BKC under the Franchise Agreements
or the Leases);
(l) Indebtedness to TJC Management Corp. and Holdings arising under
the Management Agreement and Tax Sharing Agreement;
(m) Indebtedness of the Borrower or any of its Subsidiaries incurred
to refinance or replace Indebtedness of such Person permitted under clause
(f) hereof, provided, that (i) the principal amount (or committed principal
amount) of such refinancing Indebtedness shall not exceed the outstanding
principal amount (or committed principal amount) of the Indebtedness being
refinanced, (ii) the terms of such refinancing Indebtedness are no more
onerous to the Borrower or such Subsidiary, as applicable, than the terms
of the Indebtedness being refinanced, and (iii) the Majority Banks shall
have consented to the incurrence of such refinancing Indebtedness, such
consent not to be unreasonably withheld;
(n) Indebtedness consisting of obligations of the Borrower or any of
its Subsidiaries under any operating lease or real estate lease other than
guarantees by Holdings, the Borrower or any Restricted Subsidiary of the
obligations under any operating lease or real estate lease of an
Unrestricted Subsidiary;
(o) Indebtedness of Holdings, the Borrower or any Restricted
Subsidiary of the Borrower consisting of Indebtedness to either (i)
refinance purchase money Indebtedness incurred in connection with the
acquisition after the date hereof of any real property or (ii) refinance
the purchase price paid by Holdings, the Borrower or such Restricted
Subsidiary in connection with the acquisition after the date hereof of any
real property, provided (1) such Indebtedness is incurred within 180 days
of the initial acquisition of such real property; (2) the proceeds of such
Indebtedness are immediately applied first to repay the outstanding amount
of the purchase money Indebtedness incurred in connection with such
acquisition and second, to repay the outstanding principal amount of the
Revolving Credit Loans and (3) the aggregate outstanding amount of such
Indebtedness permitted by this (S)9.1(o), when taken together with the
outstanding amount of all Indebtedness permitted by (S)9.1(g)(iii) shall
not exceed $20,000,000 outstanding at any one time.
(p) Indebtedness of any Unrestricted Subsidiary; and
(q) Indebtedness of Holdings arising under the Senior Notes.
Notwithstanding anything to the contrary contained in this (S)9.1, in no event
shall Holdings, the Borrower or its Restricted Subsidiaries, after the Closing
Date, incur Indebtedness under (S)9.1(g) or (o) hereunder if (a) an Event of
Default exists or would exist after giving effect to the incurrence of such
additional Indebtedness or (b) such an incurrence is not otherwise permitted
pursuant to Section 4.07(a) of the Senior Notes Indenture.
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9.2. Restrictions on Liens. Each of Holdings and the Borrower will not,
and will not permit any of its Subsidiaries to, (a) create or incur or suffer to
be created or incurred or to exist any lien, encumbrance, mortgage, pledge,
charge, restriction or other security interest of any kind upon any of its
property or assets of any character whether now owned or hereafter acquired, or
upon the income or profits therefrom; (b) transfer any of such property or
assets or the income or profits therefrom for the purpose of subjecting the same
to the payment of Indebtedness or performance of any other obligation in
priority to payment of its general creditors; (c) acquire, or agree or have an
option to acquire, any property or assets upon conditional sale or other title
retention or purchase money security agreement, device or arrangement; (d)
suffer to exist for a period of more than thirty (30) days after the same shall
have been incurred any Indebtedness or claim or demand against it that if unpaid
might by law or upon bankruptcy or insolvency, or otherwise, be given any
priority whatsoever over its general creditors; or (e) sell, assign, pledge or
otherwise transfer any accounts, contract rights, general intangibles, chattel
paper or instruments, with or without recourse; provided that Holdings, the
Borrower and any Subsidiary of Holdings or the Borrower may create or incur or
suffer to be created or incurred or to exist:
(i) liens to secure taxes, assessments and other government charges
in respect of obligations not overdue or liens on properties to secure
claims for labor, material or supplies in respect of obligations not
overdue;
(ii) deposits or pledges made in connection with, or to secure
payment of, workmen's compensation, unemployment insurance, old age
pensions or other social security obligations;
(iii) liens on properties other than the Mortgaged Properties in
respect of judgments or awards, the Indebtedness with respect to which is
permitted by (S)9.1(d);
(iv) liens of carriers, warehousemen, mechanics and materialmen, and
other like liens on properties, in existence less than 120 days from the
date of creation thereof in respect of obligations not overdue;
(v) encumbrances on Real Estate other than the Mortgaged Properties
consisting of easements, rights of way, zoning restrictions, restrictions
on the use of real property and defects and irregularities in the title
thereto, landlord's or lessor's liens under leases to which Holdings, the
Borrower or a Subsidiary of Holdings or the Borrower is a party, and other
minor liens or encumbrances none of which in the opinion of Holdings or the
Borrower interferes materially with the use of the property affected in the
ordinary conduct of the business of Holdings, the Borrower and their
Subsidiaries, which defects do not individually or in the aggregate have a
materially adverse effect on the business of the Borrower individually or
of Holdings, the Borrower and their Subsidiaries on a consolidated basis;
(vi) liens existing on the date hereof and listed on Schedule 9.2
hereto;
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(vii) purchase money security interests in or purchase money
mortgages on real or personal property acquired after the date hereof to
secure purchase money Indebtedness of the type and amount permitted by
(S)9.1(g), incurred in connection with the acquisition of such property,
which security interests or mortgages cover only the real or personal
property so acquired;
(viii) liens in favor of the Agent for the benefit of the Banks and
the Agent under the Loan Documents;
(ix) liens in favor of BKC to the extent provided in the Franchise
Agreements and Leases; and
(x) liens on assets of the Unrestricted Subsidiaries.
9.3. Restrictions on Investments. Neither Holdings nor the Borrower will,
and neither will permit any of their Subsidiaries to, make or permit to exist or
to remain outstanding any Investment except Investments in:
(a) marketable direct or guaranteed obligations of the United States
of America that mature within one (1) year from the date of purchase by
Holdings or the Borrower;
(b) demand deposits, certificates of deposit, bankers acceptances and
time deposits of United States banks having total assets in excess of
$500,000,000;
(c) securities commonly known as "commercial paper" issued by a
corporation organized and existing under the laws of the United States of
America or any state thereof that at the time of purchase have been rated
and the ratings for which are not less than "P 1" if rated by Moody's
Investors Services, Inc., and not less than "A 1" if rated by Standard and
Poor's;
(d) Repurchase agreements secured by any one or more of the
foregoing;
(e) Investments existing on the date hereof and listed on Schedule
9.3 hereto and in amounts not to exceed the amounts listed on Schedule 9.3
hereto;
(f) Investments consisting of the Guarantees;
(g) Investments by Holdings in Subsidiaries of Holdings formed or
acquired after the Closing Date other than Unrestricted Subsidiaries,
provided (i) such Subsidiary has become a party to the Credit Agreement as
a Guarantor and has complied with (S)9.5.1, (ii) such Investments do not
exceed, in the aggregate, $7,500,000 outstanding at any one time and (iii)
the Agent has approved such Investments;
(h) Investments by the Borrower in any of its Restricted
Subsidiaries, provided, such Restricted Subsidiary has executed and
delivered to the Agent for the benefit of the Agent and the Banks a
guaranty and security agreement
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and such Investments do not exceed, in the aggregate, $7,500,000
outstanding at any one time;
(i) Investments by the Borrower in any of its Unrestricted
Subsidiaries, provided, such Investments in such Unrestricted Subsidiaries
do not exceed, in the aggregate, $7,500,000 outstanding at any one time;
(j) Investments by the Borrower or any of its Subsidiaries made in
connection with any Indebtedness permitted under (S)9.1(l) hereof;
(l) Investments by the Borrower consisting of Distributions permitted
by (S)9.4; and
(n) Investment by Unrestricted Subsidiaries in Persons other than
Holdings, the Borrower or any Restricted Subsidiary.
9.4. Distributions. Holdings will not make any Distributions, and the
Borrower and its Subsidiaries will not make any Restricted Payments, other than
dividends or payments:
(a) by the Borrower to Holdings required under the Tax Sharing
Agreement to permit Holdings to pay income, franchise and other taxes and
governmental levies owed or payable by Holdings, provided such dividends or
payments shall not be made earlier than fifteen (15) days prior to the date
such payments are due and payable pursuant to the Tax Sharing Agreement;
(b) by the Borrower to Holdings to permit Holdings to pay director
fees (not to exceed $100,000 in the aggregate in any calendar year);
(c) so long as no Default or Event of Default exists and is
continuing at the time of such payment or would result therefrom, payments
by the Borrower to Holdings to permit Holdings to (i) fund indemnity
payments required by Holdings' certificate of incorporation or by-laws or
director indemnity agreements existing on the date hereof, (ii) pay filing,
registration and reporting fees and expenses, and fees and expenses
associated with state qualifications and other state, federal or regulatory
compliance matters, (iii) comply with expense reimbursement and indemnity
provisions under the Management Agreement, (iv) make required payments of
interest on the Senior Notes provided the Borrower shall only be permitted
to make such payments to Holdings in each fiscal year and up to an
aggregate amount equal to the amount of interest Holdings is required to
pay in cash on the Senior Notes in and with respect to such fiscal year and
solely for the purpose of making such interest payments, provided, however,
such amount shall not include any Restricted Payments to fund any increases
in the rate of interest on such Senior Notes after December 3, 1996; and
(v) comply with expense reimbursement provisions under the Capitalization
Documents, provided, such dividends or payments permitted by this 9.4(c)(i)
- (v) shall not be made earlier than fifteen (15) days prior to the date
such payments are due and payable by Holdings;
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(d) by the Borrower, so long as no Default or Event of Default under
(S)13.1(a), (b)(i) or, only as relates to failure to comply with (S)10
hereof, (c), has occurred or is continuing, or would result therefrom, or,
if a Default or Event of Default under (S)13.1(b)(ii) through (v) has
occurred, the Agent has not provided the Borrower with notice of such
Default or Event of Default, which notice specifies that the Borrower is
not permitted to make payments to Holdings pursuant to this (S)9.4(d), to
TJC Management Corporation and/or Holdings consisting of quarterly
management fee payments in an aggregate annual amount of either (a) two and
one-half percent (2 1/2%) of EBITDA for such fiscal year, up to an amount
not to exceed $600,000 minus any amounts paid pursuant to (S)9.4(b) in any
fiscal year prior to the fiscal year ending December 31, 1999 or (b) if
greater, $750,000 per fiscal year, which are due and payable in such fiscal
year pursuant to the Management Agreement or the Intercompany Management
Agreement and indemnity payments required to be made under the Management
Agreement, provided such dividends or payments shall not be made earlier
than fifteen (15) days prior to the date such payments are due and payable
pursuant to the terms of the Management Agreement or the Intercompany
Management Agreement, as the case may be; and
(e) by any Subsidiary of the Borrower to the Borrower.
9.5. Merger, Consolidation and Disposition of Assets.
9.5.1. Mergers and Acquisitions. Neither Holdings nor the Borrower
will, and neither will permit any of its Subsidiaries to, become a party to
any merger or consolidation, or agree to or effect any asset acquisition or
stock acquisition (other than the acquisition of assets in the ordinary
course of business consistent with past practices) except (a) the merger or
consolidation of one or more of the Subsidiaries of Holdings (other than
the Borrower) or the Borrower with and into its parent provided, that the
survivor of such merger may not be an Unrestricted Subsidiary, (b) the
merger or consolidation of two or more Subsidiaries of Holdings (other than
the Borrower) or the Borrower, provided that the survivor of such merger
may not be an Unrestricted Subsidiary unless the merger involves only
Unrestricted Subsidiaries, (c) acquisitions by Holdings or any of its
Unrestricted Subsidiaries of the assets and businesses of BKC Restaurants
or other restaurants, or real estate upon which a restaurant is located or
is intended to be located and (d) acquisitions by the Borrower or any of
its Subsidiaries of the assets and businesses of BKC Restaurants or other
quick service restaurants (the "Permitted Acquisitions") where (i) no
Default or Event of Default has occurred or is continuing or would exist
after giving effect thereto; (ii) the Borrower has provided the Agent with
prior written notice of such acquisition; (iii) in the event any new
Restricted Subsidiary is formed or acquired as a result of or in connection
with any acquisition or development, such Restricted Subsidiary shall
become a guarantor of the Obligations pursuant to a guaranty in form and
substance satisfactory to the Agent, and the Borrower or Subsidiary which
is the parent of such Restricted Subsidiary, as the case may be, shall
pledge to the Agent the non-voting capital stock of such Restricted
Subsidiary; (iv) the Borrower or the
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Restricted Subsidiary, as the case may be, has taken all necessary actions
to grant to the Agent a first priority perfected lien in such assets other
than those assets which are not permitted to be encumbered by any Franchise
Agreement or lease affecting such restaurant or which secure purchase money
Indebtedness permitted pursuant to (S)9.1(g), and, in the case of an
Unrestricted Subsidiary, such Unrestricted Subsidiary has taken all
necessary action to grant to the Agent a perfected lien on the non-voting
capital stock of its Subsidiaries pursuant to the requirements of (S)6.1
hereof; (v) the Borrower has demonstrated to the Agent based on a pro forma
Compliance Certificate covenant compliance with (S)10 on a Pro Forma Basis
immediately prior to and after giving effect to such acquisition; (vi) any
acquisition-related Indebtedness would not violate the restrictions on
Indebtedness set forth in (S)9.1; (vii) immediately after giving effect to
such acquisition, the Total Commitment exceeds the sum of (1) the aggregate
outstanding Revolving Credit Loans plus (2) the Maximum Drawing Amount plus
(3) all Unpaid Reimbursement Obligations by at least $2,500,000; (viii) the
Borrower has demonstrated to the satisfaction of the Agent that the
Leverage Ratio of Holdings and its Subsidiaries on a Pro Forma Basis
immediately prior to and after giving effect to such acquisition does not
exceed 5.50:1.00; and (ix) the Borrower has demonstrated to the
satisfaction of the Agent that the revenues of all restaurants to be
acquired in any Permitted Acquisition does not exceed thirty three and one-
third percent (33 1/3%) of the Borrower's revenues prior to the proposed
acquisition, determined on a Pro Forma Basis.
In the event any new Restricted Subsidiary is formed as a result of or
in connection with any acquisition or development, the Loan Documents shall
be amended and/or supplemented as necessary to make the terms and
conditions of the Loan Documents applicable to such Restricted Subsidiary.
In the case of Holdings forming such Subsidiary, such Subsidiary shall
become a Borrower hereunder, and in the case of the Borrower forming such
Restricted Subsidiary, such Restricted Subsidiary shall be a guarantor
hereunder.
9.5.2. Disposition of Assets. Neither Holdings nor the Borrower will,
and neither will permit any of its Subsidiaries to, become a party to or
agree to or effect any disposition of assets, other than (a) the sale of
inventory in the ordinary course of business, consistent with past
practices, (b) the disposition of obsolete assets which are no longer used
or useful in current or planned business operations of such Person, (c) the
disposition of assets in the ordinary course of business, consistent with
past practices, (d) the assignment of the Borrower's Option, so long as at
the time such assignee exercises the Option, the Borrower and such assignee
enter into a lease with terms no less favorable to the Borrower than the
terms of the lease being replaced as a result of the exercise of the
Option, (e) so long as no Default or Event of Default has occurred and is
continuing or would result therefrom, the sale or other disposition of
assets, provided that either (i) the aggregate Net Sale Proceeds from all
such asset sales or dispositions does not exceed $2,500,000 in any fiscal
year or; (ii) in the event of any asset sales or dispositions in excess of
$2,500,000 in any fiscal year, at least 75% of the net proceeds from such
asset sale are applied to one or
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more of the following purposes in such combination as Holdings or the
Borrower, as the case may be, elects: (1) an investment in another asset or
business in the same line of business as, or a line of business similar to
that of, the line of business of Holdings and its Subsidiaries at the time
of such asset sale, provided that such investment occurs on or prior to the
365th day following the date of such asset sale (the "Asset Sale
Disposition Date"), (2) to reimburse Holdings or its Subsidiaries for
expenditures made, and costs incurred, to repair, rebuild, replace or
restore property subject to loss, damage or taking; or (3) the repayment or
prepayment of outstanding Revolving Credit Loans of the Borrower on or
prior to the 365th day following the Asset Sale Disposition Date and a
permanent reduction of the Total Commitment by an amount equal to such
required repayment; and (f) so long as no Default or Event of Default has
occurred and is continuing, the sale of any real property acquired by the
Borrower or any Restricted Subsidiary after the date hereof, provided (i)
such sale occurs within 180 days after the Borrower or such Restricted
Subsidiary initially acquires such real property; (ii) the Borrower or such
Restricted Subsidiary receives cash proceeds from such sale of not less
than the fair market value of such real property; (iii) the Borrower or
such Restricted Subsidiary receives the entire purchase price for such real
property in cash; and (iv) the cash proceeds of such sale are applied first
to repay the outstanding amount of the purchase money Indebtedness incurred
in connection with the acquisition of such real property and second to
repay the outstanding principal amount of the Revolving Credit Loans.
Notwithstanding anything to the contrary contained in this (S)9.5,
neither Holdings nor any of its Subsidiaries shall be permitted to dispose
of any assets or take (or omit to take) any action in connection with any
asset sale or other asset disposition or engage in any other transaction
which action (or omission) would require or result in any repayment,
repurchase or redemption (or any mandatory offer to repay, repurchase or
redeem) by Holdings or any of its Subsidiaries of the Senior Notes pursuant
to the Section 4.14 of the Senior Notes Indenture.
9.6. Sale and Leaseback. Except as set forth on Schedule 9.6 hereto or as
expressly permitted pursuant to (S)9.5.2 hereof, neither Holdings nor the
Borrower will, and neither will permit any of its Subsidiaries to, enter into
any arrangement, directly or indirectly, whereby Holdings, the Borrower or any
Subsidiary of Holdings or the Borrower shall sell or transfer any property owned
by it in order then or thereafter to lease such property or lease other property
that Holdings or the Borrower or any Subsidiary of Holdings or the Borrower
intends to use for substantially the same purpose as the property being sold or
transferred, provided, however, that Holdings, the Borrower or any of their
Subsidiaries may enter into such sale-leaseback transactions to the extent that
the Indebtedness incurred in connection with such transactions is permitted
under (S)9.1(g) hereof.
9.7. Compliance with Environmental Laws. Except as set forth on Schedule
9.7 hereto, neither Holdings nor the Borrower will, and neither will permit any
of its Subsidiaries to, (a) use any of the Real Estate or any portion thereof
for the
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handling, processing, storage or disposal of Hazardous Substances in violation
of any Environmental Law the noncompliance with which would have a material
adverse effect on the business, assets or financial condition of Holdings, the
Borrower or their Subsidiaries taken as a whole, (b) cause or permit to be
located on any of the Real Estate any underground tank or other underground
storage receptacle for Hazardous Substances in violation of any Environmental
Law the noncompliance with which would have a material adverse effect on the
business, assets or financial condition of Holdings, the Borrower or their
Subsidiaries taken as a whole, (c) generate any Hazardous Substances on any of
the Real Estate in violation of any Environmental Law the noncompliance with
which would have a material adverse effect on the business, assets or financial
condition of Holdings, the Borrower or their Subsidiaries taken as a whole, (d)
conduct any activity at any Real Estate or use any Real Estate in any manner so
as to cause a release (i.e. releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing or
dumping) or threatened release of Hazardous Substances on, upon or into the Real
Estate or (e) otherwise conduct any activity at any Real Estate or use any Real
Estate in any manner that would violate any Environmental Law or bring such Real
Estate in violation of any Environmental Law in each case if such violation
would have a material adverse effect on the business, assets or financial
condition of Holdings, the Borrower and its Subsidiaries, taken as a whole.
9.8. Subordinated Debt and Preferred Stock. From and after the Closing
Date, neither Holdings nor the Borrower will, and neither will permit any of its
Subsidiaries to, (a) amend, supplement or otherwise modify the terms of any of
the Subordinated Debt, the Exchange Debentures, the Exchange Debenture
Indentures, the Senior Notes or the Senior Notes Indenture (i) which amendment,
supplement or modification effects any increase in the principal amount of the
Subordinated Notes, the Exchange Debentures or the Senior Notes, the interest
rate thereon or any fees under the Subordination Documents or any of the
Offering Documents or tightens or adds covenants or defaults or events of
default thereto, or (ii) which amendment, supplement or modification relates to
other terms and provisions of the Subordination Documents and Offering
Documents, as the case may be, and the cumulative effect of which in either case
is to materially adversely affect the Agent's or the Bank's rights or interests
under the Loan Documents or the Borrower's ability to fulfill its obligations
under the Loan Documents, or (iii) prepay, redeem, repurchase or make any
payment in defeasance of any of the Subordinated Debt, the Exchange Debentures
or the Senior Notes or send any notice of redemption, repayment, repurchase or
defeasance with respect to any of the Subordinated Debt, the Exchange Debentures
or the Senior Notes or (b) amend, supplement or otherwise modify the terms of
the Stockholders Agreement or the Offering Documents (including any provisions
pertaining to any Preferred Stock) if such amendment, supplement or modification
could reasonably be expected to adversely affect the Agent's or the Banks'
rights or impact the Borrower's or Holdings' abilities to fulfill their
obligations under the Loan Documents.
9.9. Employee Benefit Plans. Neither Holdings, the Borrower nor any ERISA
Affiliate will
<PAGE>
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(a) engage in any "prohibited transaction" within the meaning of
(S)406 of ERISA or (S)4975 of the Code which could result in a material
liability for the Borrower or any of its Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency", as such term is defined in (S)302 of ERISA, whether or
not such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an extent
which, or terminate any Guaranteed Pension Plan in a manner which, could
result in the imposition of a lien or encumbrance on the assets of the
Borrower or any of its Subsidiaries pursuant to (S)302(f) or (S)4068 of
ERISA; or
(d) permit or take any action which would result in the aggregate
benefit liabilities (with the meaning of (S)4001 of ERISA) of all
Guaranteed Pension Plans exceeding the value of the aggregate assets of
such Plans, disregarding for this purpose the benefit liabilities and
assets of any such Plan with assets in excess of benefit liabilities, by
more than the amount set forth in (S)7.16.3.
9.10. Change in Terms of Capital Stock. Neither Holdings nor the Borrower
will, and neither will permit any of its Restricted Subsidiaries to effect or
permit any change in or amendment to any document or instrument pertaining to
the terms of such Person's capital stock without the written consent of the
Banks unless such change or amendment is of an immaterial or ministerial nature
that would not have any adverse effect on the Agent's or the Banks' rights under
the Loan Documents or the Borrower's or Holdings' obligations under the Loan
Documents; provided, however, so long as no Default or Event of Default has
occurred and is continuing or would exist as a result thereof, Holdings shall be
entitled to modify its outstanding capital stock or issue shares of a new class
of capital stock provided that (i) the terms of such capital stock do not permit
any cash dividends to be paid to the holders thereof until all of the
Obligations have been indefeasibly repaid in full in cash and the Commitment has
been permanently reduced to zero; (ii) the terms of such capital stock do not
contain any mandatory redemption rights until such time as all of the
Obligations have been indefeasibly repaid in full in cash and the Commitment has
been permanently reduced to zero; and (iii) such capital stock is non-voting
and, if convertible, is only convertible into a non-voting class of capital
stock.
9.11. Fiscal Year. Neither Holdings nor the Borrower nor any Subsidiaries
will change the date of the end of their respective fiscal years from that set
forth in (S)7.21 hereof.
9.12. Business Activities. Holdings will not engage in any business
activity, except for the acquisition, development and operation of BKC
Restaurants, other restaurants or real property upon which a restaurant is
located or is intended to be located, activities in connection with Investments
permitted by (S)9.3(g), its ownership of the Borrower and its performance from
time to time of its obligations under this Credit Agreement, the other Loan
Documents, the Stock Purchase Agreement, the Offering Documents, the
Capitalization Documents and each other agreement,
<PAGE>
-71-
instrument or document contemplated hereby, whether or not executed on or before
the Closing Date.
9.13. Modification of Documents. Neither Holdings nor the Borrower will
consent to or agree to any amendment, supplement or other modification to the
Tax Sharing Agreement, the Management Agreement, the Management Subscription
Agreement or the Intercompany Management Agreement which affects, in a manner
adverse to Holdings or the Borrower, the amount or timing of payments required
to be made by the Borrower or Holdings thereunder, or if such amendment,
supplement or modification could reasonably be expected to adversely affect the
Agent's or the Banks' rights or interests or adversely affect the Borrower's or
Holdings' abilities to fulfill their obligations under the Loan Documents.
9.14. Negative Pledges. Neither Holdings, the Borrower nor any of their
Subsidiaries other than the Unrestricted Subsidiaries will enter into any
agreement (excluding this Credit Agreement and the other Loan Documents)
prohibiting the creation or assumption of any lien upon its properties, revenues
or assets or those of any of its Subsidiaries, whether now owned or hereafter
acquired other than agreements with Persons prohibiting any such lien on assets
in which such Person has a prior security interest which is permitted by (S)9.2.
9.15. Transactions with Affiliates. Neither Holdings nor the Borrower will,
nor will they permit any of their Subsidiaries to, enter into, or cause, suffer
or permit to exist (a) any arrangement or contract with any of its other
Affiliates of a nature customarily entered into by Persons which are Affiliates
of each other (including management or similar contracts or arrangements
relating to the allocation of revenues, taxes and expenses or otherwise)
requiring any payments to be made by Holdings, the Borrower or any of their
Subsidiaries to any Affiliate unless such arrangement is fair and equitable to
Holdings, the Borrower or such Subsidiary; or (b) any other transaction,
arrangement, contract with any of their other Affiliates which would not be
entered into by a prudent Person in the position of Holdings, the Borrower or
such Subsidiary with, or which is on terms which are less favorable than are
obtainable from, any Person which is not one of its Affiliates, provided,
however, nothing contained in this (S)9.15 shall prohibit Holdings or the
Borrower from making or receiving payments otherwise permitted by (S)9.4 hereof.
9.16. Upstream Limitations. The Borrower will not, nor will the Borrower
permit any of its Restricted Subsidiaries to enter into any agreement, contract
or arrangement (other than the Credit Agreement and the other Loan Documents or
the Offering Documents) restricting the ability of any Restricted Subsidiary to
pay or make dividends or distributions in cash or kind, to make loans, advances
or other payments of whatsoever nature or to make transfers or distributions of
all or any part of its assets to the Borrower or to any Subsidiary of such
Restricted Subsidiary.
9.17. Inconsistent Agreements. Neither Holdings nor the Borrower will, nor
will they permit any of their Subsidiaries to, enter into any agreement
containing any provision which would be violated or breached by the performance
by Holdings, the Borrower or such Subsidiary of its obligations hereunder or
under any of the Loan Documents.
<PAGE>
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9.18. Acquisition and Development Restrictions. Neither Holdings nor the
Borrower will, and neither will permit any of their Subsidiaries to, give effect
to any acquisition and/or development of BKC Restaurants or other quick-service
restaurants, if the total number of non-BKC Restaurants of Holdings, the
Borrower and their Subsidiaries exceeds, in the aggregate, fifteen (15)
restaurants and the total number of Dual Use Establishments exceeds twenty
percent (20%) of the number of restaurants owned by Holdings, the Borrower and
their respective Subsidiaries at the end of the immediately preceding fiscal
year.
10. FINANCIAL COVENANTS OF THE BORROWER.
-----------------------------------
Each of Holdings and the Borrower covenants and agrees that, so long as any
Revolving Credit Loan, Unpaid Reimbursement Obligation, Letter of Credit or
Revolving Credit Note is outstanding or any Bank has any obligation to make any
Revolving Credit Loans or the Agent has any obligation to issue, extend or renew
any Letters of Credit:
10.1. Debt Service Coverage Ratio. Neither Holdings nor the Borrower will,
as of the end of any fiscal quarter permit the Debt Service Coverage Ratio for
the Reference Period ending on such date to be less than 1.25:1.00.
10.2. Interest Coverage Ratio. Neither Holdings nor the Borrower will, as
of the end of any fiscal quarter ending nearest the dates set forth in the table
below, permit the Interest Coverage Ratio for the Reference Period ending on
such date to be less than the ratio set forth opposite such period in such
table:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Fiscal Quarters Ending Nearest Amount
------------------------------ ------
----------------------------------------------------------------------------------------------
<S> <C>
6/30/97; 9/30/97; 12/31/97; 3/31/98; 6/30/98; 9/30/98 1.60:1.00
----------------------------------------------------------------------------------------------
12/31/98; 3/31/99; 6/30/99; 9/30/99 1.70:1.00
----------------------------------------------------------------------------------------------
12/31/99; 3/31/00; 6/30/00; 9/30/00 1.80:1.00
----------------------------------------------------------------------------------------------
12/31/00; 3/31/01; 6/30/01; 9/30/01 1.90:1.00
----------------------------------------------------------------------------------------------
12/31/01 and each fiscal quarter thereafter 2.00:1.00
----------------------------------------------------------------------------------------------
</TABLE>
10.3. Leverage Ratio. Neither Holdings nor the Borrower will, at any time
during any period described in the table set forth below, permit the Leverage
Ratio to exceed the ratio set forth opposite such period in such table:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Period Ratio
------ -----
----------------------------------------------------------------------------------------------
<S> <C>
Closing Date - 09/30/98 6.05:1.00
----------------------------------------------------------------------------------------------
10/01/98 - 03/31/00 6.00:1.00
----------------------------------------------------------------------------------------------
04/01/00 - 06/30/00 5.90:1.00
----------------------------------------------------------------------------------------------
07/01/00 - 12/31/00 5.75:1.00
----------------------------------------------------------------------------------------------
01/01/01 - 06/30/01 5.50:1.00
----------------------------------------------------------------------------------------------
07/01/01 - 09/30/01 5.25:1.00
----------------------------------------------------------------------------------------------
10/01/01 and thereafter 5.00:1.00
----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
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11. CLOSING CONDITIONS.
------------------
The obligations of the Banks to make the initial Revolving Credit Loans and
of the Agent to issue any initial Letters of Credit shall be subject to the
satisfaction of the following conditions precedent on or prior to June 30, 1997:
11.1. Loan Documents etc.
11.1.1. Loan Documents. Each of the Loan Documents shall have been
duly executed and delivered by the respective parties thereto, shall be in
full force and effect and shall be in form and substance satisfactory to
each of the Banks. Each Bank shall have received a fully executed copy of
each such document.
11.1.2. AmeriKing NC Acquisition Documents. Each of the AmeriKing NC
Acquisition Documents not previously executed and delivered prior to the
Closing Date, and any amendments thereto, shall have been duly executed and
delivered by the respective parties thereto, shall be in full force and
effect and shall be in form and substance satisfactory to each of the
Banks. The Agent shall have received a fully executed copy of each such
document.
11.2. Certified Copies of Charter Documents. Each of the Banks shall have
received from Holdings, the Borrower and each of its Subsidiaries a copy,
certified by a duly authorized officer of such Person to be true and complete on
the Closing Date, of each of (a) its charter or other incorporation documents as
in effect on such date of certification, and (b) its by-laws as in effect on
such date.
11.3. Corporate Action. All corporate action necessary for the valid
execution, delivery and performance by Holdings, the Borrower and its
Subsidiaries of this Credit Agreement and the other Loan Documents to which it
is or is to become a party shall have been duly and effectively taken, and
evidence thereof satisfactory to the Banks shall have been provided to each of
the Banks.
11.4. Incumbency Certificate. Each of the Banks shall have received from
Holdings, the Borrower and its Subsidiaries an incumbency certificate, dated as
of the Closing Date, signed by a duly authorized officer of Holdings, the
Borrower and its Subsidiaries, and giving the name and bearing a specimen
signature of each individual who shall be authorized: (a) to sign, in the name
and on behalf of each of Holdings, the Borrower and its Subsidiaries, each of
the Loan Documents and Subordination Documents to which the Borrower and its
Subsidiaries is or is to become a party; (b) in the case of the Borrower, to
make Loan Requests and Conversion Requests and to apply for Letters of Credit;
and (c) to give notices and to take other action on its behalf under the Loan
Documents.
11.5. Validity of Liens. The Security Documents shall be effective to
create in favor of the Agent a legal, valid and enforceable first (except for
Permitted Liens entitled to priority under applicable law) security interest in
and lien upon the Collateral. All filings, recordings, deliveries of instruments
and other actions necessary or desirable in the opinion of the Agent to protect
and preserve such security
<PAGE>
-74-
interests shall have been duly effected. The Agent shall have received evidence
thereof in form and substance satisfactory to the Agent.
11.6. Perfection Certificates and UCC Search Results. The Agent shall have
received from each of Holdings, the Borrower and its Subsidiaries other than the
Unrestricted Subsidiaries a completed and fully executed Perfection Certificate
and the results of UCC searches with respect to the Collateral, indicating no
liens other than Permitted Liens and otherwise in form and substance
satisfactory to the Agent.
11.7. Certificates of Insurance. The Agent shall have received a
certificate of insurance from an independent insurance broker dated as of the
Closing Date, identifying insurers, types of insurance, insurance limits, and
policy terms, and otherwise describing the insurance obtained in accordance with
the provisions of the Security Documents.
11.8. Solvency Certificate. Each of the Banks shall have received an
officer's certificate of the Borrower dated as of the Closing Date as to the
solvency of Holdings, the Borrower and their Subsidiaries following the
consummation of the transactions contemplated herein and in form and substance
satisfactory to the Banks.
11.9. Opinion of Counsel. Each of the Banks and the Agent shall have
received a favorable legal opinion addressed to the Banks and the Agent, dated
as of the Closing Date, in form and substance reasonably satisfactory to the
Agent, from Mayer, Brown & Platt, special counsel to Holdings, the Borrower and
their Subsidiaries.
11.10. Payment of Fees and other Arrangements. The Borrower shall have paid
to the Banks or the Agent, as appropriate, the closing fee, the amendment fee
and the Agent's Fee and complied with all other arrangements set forth in the
Fee Letter between the Agent and the Borrower.
11.11. Disbursement Instructions. The Agent shall have received
disbursement instructions from the Borrower with respect to the proceeds of the
initial Revolving Credit Loan.
11.12. Satisfaction of Conditions of AmeriKing NC Acquisition Documents.
The Agent shall have received evidence that all of the closing conditions in the
AmeriKing NC Acquisition Documents have been satisfied or waived in writing by
the appropriate parties.
11.13. Completion of Acquisition. The AmeriKing NC Acquisition shall have
been completed pursuant to the AmeriKing NC Acquisition Documents and otherwise
on terms and conditions that are satisfactory to the Agent in all respects.
11.14. Completion of Successful Financial Inquiry. The Agent and the Banks
shall be satisfied that all information provided to the Agent prior to the
Closing Date accurately sets forth the cash flow for such period attributable to
the assets and business to be acquired in the AmeriKing NC Acquisition.
<PAGE>
-75-
11.15. Taxes. The Agent shall have received evidence of payment of real
estate taxes and municipal charges on all Real Estate due on or before the
Closing Date.
11.16. Title Insurance. The Agent shall have received an endorsement to
each Title Policy covering each Mortgaged Property together with proof of
payment of all fees and premiums for such endorsements, from the Title Insurance
Company and in amounts satisfactory to the Agent, insuring the interest of the
Agent and each of the Banks as mortgagee under the Mortgages.
11.17. Landlord Consents. The Borrower and its Subsidiaries shall have
delivered to the Agent all consents which are required for the Agent to receive,
as part of the Security Documents, a leasehold mortgage on each of the Mortgaged
Properties existing on the Closing Date and estoppel certificates on each of the
Mortgaged Properties as the Agent may reasonably request.
11.18. Consents and Approvals. The Agent shall have received evidence that
all consents and approvals necessary to complete the transactions contemplated
hereby have been obtained.
11.19. Allocation Adjustments. The Agent shall have received evidence that
the parties hereto have agreed to any necessary adjustments regarding interest
and fees owing to any of the Banks under the Original Credit Agreement resulting
from the reallocation of the Commitments under this Credit Agreement.
11.20. Dissolution of AmeriKing NC. The Borrower shall have delivered to
the Agent evidence satisfactory to the Agent that the dissolution of AmeriKing
NC has occurred on or prior to the Closing Date.
12. CONDITIONS TO ALL BORROWINGS.
----------------------------
The obligations of the Banks to make any Revolving Credit Loan, including
the initial Revolving Credit Loan, and of the Agent to issue, extend or renew
any Letter of Credit, in each case whether on or after the Closing Date, shall
also be subject to the satisfaction of the following conditions precedent:
12.1. Presentations True; No Event of Default. Each of the representations
and warranties of any of Holdings, the Borrower and their Subsidiaries contained
in this Credit Agreement, the other Loan Documents or in any document or
instrument delivered pursuant to or in connection with this Credit Agreement
shall be true as of the date as of which they were made and shall also be true
at and as of the time of the making of such Revolving Credit Loan or the
issuance, extension or renewal of such Letter of Credit, with the same effect as
if made at and as of that time (except to the extent of changes resulting from
transactions contemplated or permitted by this Credit Agreement and the other
Loan Documents and changes occurring in the ordinary course of business that
singly or in the aggregate are not materially adverse, and to the extent that
such representations and warranties relate
<PAGE>
-76-
expressly to an earlier date) and no Default or Event of Default shall have
occurred and be continuing.
12.2. No Legal Impediment. No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable opinion
of any Bank would make it illegal for such Bank to make such Revolving Credit
Loan or to participate in the issuance, extension or renewal of such Letter of
Credit or in the reasonable opinion of the Agent would make it illegal for the
Agent to issue, extend or renew such Letter of Credit.
12.3. Governmental Regulation. Each Bank shall have received such
statements in substance and form reasonably satisfactory to such Bank as such
Bank shall require for the purpose of compliance with any applicable regulations
of the Comptroller of the Currency or the Board of Governors of the Federal
Reserve System.
12.4. Proceedings and Documents. All proceedings in connection with the
transactions contemplated by this Credit Agreement, the other Loan Documents and
all other documents incident thereto shall be satisfactory in substance and in
form to the Banks and to the Agent and the Agent's Special Counsel, and the
Banks, the Agent and such counsel shall have received all information and such
counterpart originals or certified or other copies of such documents as the
Agent may reasonably request.
12.5. Conditions to Advances of Revolving Credit Loans for Acquisitions.
12.5.1. Acquisition Documents. The Agent shall have received copies
of all material documents to be entered into in connection with each such
Permitted Financed Acquisition, and shall be satisfied with the terms
thereof.
12.5.2. Pro Forma Compliance. The Agent and each Bank shall have
received a Compliance Certificate from the Borrower showing pro forma
compliance with the covenants set forth in (S)10 both prior to and after
giving effect to each Permitted Financed Acquisition.
12.5.3. Use of Proceeds. The Agent shall have received evidence that
the Borrower has used the proceeds of each Revolving Credit Loan requested
solely to finance the cash portion of the purchase price and related
transaction costs of each Permitted Financed Acquisition for which such
Revolving Credit Loan is being requested.
13. EVENTS OF DEFAULT; ACCELERATION; ETC.
------------------------------------
13.1. Events of Default and Acceleration. If any of the following events
("Events of Default" or, if the giving of notice or the lapse of time or both is
required, then, prior to such notice or lapse of time, "Defaults") shall occur:
(a) the Borrower shall fail to pay any principal of the Revolving
Credit Loans or any Reimbursement Obligation when the same shall become due
and
<PAGE>
-77-
payable, whether at the stated date of maturity or any accelerated date of
maturity or at any other date fixed for payment;
(b) the Borrower shall fail to pay any (i) interest on the Revolving
Credit Loans, (ii) the commitment fee, (iii) any Letter of Credit Fee, (iv)
the Agent's fee, or (v) other sums due hereunder or under any of the other
Loan Documents, when the same shall become due and payable, whether at the
stated date of maturity or any accelerated date of maturity or at any other
date fixed for payment and such failure shall continue for five (5) days;
(c) the Borrower or Holdings shall fail to comply with any of its
covenants contained in the first sentence of (S)8.6, (S)(S)8.9, 8.12, 8.13,
9.1 through 9.6, 9.8, 9.10, 9.11 or (S)10;
(d) Holdings, the Borrower or any of their Subsidiaries shall fail to
perform any term, covenant or agreement contained herein or in any of the
other Loan Documents (other than those specified elsewhere in this (S)13.1)
for thirty (30) days after written notice of such failure has been given to
the Borrower by the Agent;
(e) any representation or warranty of Holdings, the Borrower or any
of their Subsidiaries in this Credit Agreement or any of the other Loan
Documents or in any other document or instrument delivered pursuant to or
in connection with this Credit Agreement shall prove to have been false in
any material respect upon the date when made or deemed to have been made or
repeated;
(f) Holdings, the Borrower or any of their Subsidiaries other than
the Unrestricted Subsidiaries shall (i) fail to pay at maturity, or within
any applicable period of grace, any obligation for borrowed money or credit
received or in respect of any Capitalized Leases in an aggregate amount in
excess of $5,000,000, or (ii) fail to observe or perform any material term,
covenant or agreement contained in any agreement by which it is bound,
evidencing or securing borrowed money or credit received or in respect of
any Capitalized Leases in an aggregate amount in excess of $5,000,000 for
such period of time as would permit (assuming the giving of appropriate
notice if required) the holder or holders thereof or of any obligations
issued thereunder to accelerate the maturity thereof, or any Indebtedness
of any of the Unrestricted Subsidiaries shall be accelerated by the holders
thereof;
(g) Holdings, the Borrower or any of their Subsidiaries shall make an
assignment for the benefit of creditors, or admit in writing its inability
to pay or generally fail to pay its debts as they mature or become due, or
shall petition or apply for the appointment of a trustee or other
custodian, liquidator or receiver of such Person or of any substantial part
of the assets of such Person or shall commence any case or other proceeding
relating to such Person under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar law
of any jurisdiction, now or hereafter in effect, or shall take any action
to authorize or in furtherance of any of the foregoing, or if any such
petition or application shall be filed or any such case or
<PAGE>
-78-
other proceeding shall be commenced against such Person and such Person
shall indicate its approval thereof, consent thereto or acquiescence
therein;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating Holdings, the Borrower or
any of their Subsidiaries bankrupt or insolvent, or approving a petition in
any such case or other proceeding, or a decree or order for relief is
entered in respect of any such Person in an involuntary case under federal
bankruptcy laws as now or hereafter constituted and such case or proceeding
remains undismissed for sixty (60) days;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty (30) days, whether or not consecutive, any
final judgment against Holdings, the Borrower or any of their Subsidiaries
that, with other outstanding final judgments, undischarged, against such
Persons exceeds in the aggregate $2,000,000;
(j) Holdings shall exchange the Senior Exchange Preferred Stock for
the Exchange Debentures; the holders of all or any part of the Subordinated
Debt, the Exchange Debentures or the Senior Notes shall accelerate the
maturity of all or any part of the Subordinated Debt, the Exchange
Debentures or the Senior Notes; or the Subordinated Debt, the Exchange
Debentures, the Senior Notes or any Preferred Stock (including, without
limitation, the Senior Exchange Preferred Stock) shall be prepaid,
redeemed, defeased or repurchased in whole or in part;
(k) if any of the Loan Documents shall be cancelled, terminated,
revoked or rescinded or the Agent's security interests, mortgages or liens
in substantially all of the Collateral shall cease to be perfected, or
shall cease to have the priority contemplated by the Security Documents, in
each case otherwise than in accordance with the terms thereof or with the
express prior written agreement, consent or approval of the Banks, or any
action at law, suit or in equity or other legal proceeding to cancel,
revoke or rescind any of the Loan Documents shall be commenced by or on
behalf of Holdings, the Borrower or any of their Subsidiaries party thereto
or any of their respective stockholders, or any court or any other
governmental or regulatory authority or agency of competent jurisdiction
shall make a determination that, or issue a judgment, order, decree or
ruling to the effect that, any one or more of the Loan Documents is
illegal, invalid or unenforceable in accordance with the terms thereof;
(l) with respect to any Guaranteed Pension Plan, an ERISA Reportable
Event shall have occurred and the Majority Banks shall have determined in
their reasonable discretion that such event reasonably could be expected to
result in liability of the Borrower or any of its Subsidiaries to the PBGC
or such Guaranteed Pension Plan in an aggregate amount exceeding $2,000,000
and such event in the circumstances occurring reasonably could constitute
grounds for the termination of such Guaranteed Pension Plan by the PBGC or
for the appointment by the appropriate United States District Court of a
trustee to administer such Guaranteed Pension Plan; or a trustee shall have
been
<PAGE>
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appointed by the United States District Court to administer such Plan; or
the PBGC shall have instituted proceedings to terminate such Guaranteed
Pension Plan;
(m) Holdings, the Borrower or any of their Subsidiaries shall be
enjoined, restrained or in any way prevented by the order of any court or
any administrative or regulatory agency from conducting any material part
of its business and such order shall continue in effect for more than
thirty (30) days;
(n) there shall occur any material damage to, or loss, theft or
destruction of, any Collateral, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public enemy,
or other casualty, which in any such case causes, for more than fifteen
(15) consecutive days, the cessation or substantial curtailment of revenue
producing activities at any facility of the Borrower or any of its
Subsidiaries if such event or circumstance is not covered by business
interruption insurance and would have a material adverse effect on the
business or financial condition of the Borrower or such Subsidiary;
(o) there shall occur the loss, suspension or revocation of, or
failure to renew, any license or permit now held or hereafter acquired by
Holdings, the Borrower or any of their Subsidiaries if such loss,
suspension, revocation or failure to renew would have a material adverse
effect on the business or financial condition of Holdings, the Borrower and
their Subsidiaries taken as a whole;
(p) Holdings shall at any time, legally or beneficially own less than
100% of the outstanding capital stock of the Borrower, or the Borrower
shall at any time, legally or beneficially own less than 100% of the
outstanding capital stock of any of its Restricted Subsidiaries and 80% of
the outstanding capital stock of any of its Unrestricted Subsidiaries;
(q) TJC and its Affiliates shall at any time have less than a
majority of the directors on the board of directors of each of Holdings and
the Borrower;
(r) The Jordan Affiliates and MCIT PLC shall at any time, legally or
beneficially own less than forty percent (40%) of the outstanding common
stock of Holdings; provided, however, after the occurrence of a firmly
underwritten public offering of the capital stock of Holdings, and evidence
that the net proceeds of such offering have been received by Holdings and
the repayment provisions of (S)3.2 have been met, such percentage shall be
reduced to twenty-four percent (24%) of the outstanding common stock of
Holdings;
(s) Leases on or Franchise Agreements with respect to restaurants
representing more then fifteen percent (15%) of Restaurant Cash Flow shall
have been terminated or expired without renewal (determined in the
aggregate over the term of this Credit Agreement), or at the time of any
Lease or Franchise Agreement termination or expiration the Borrower fails
to demonstrate pro forma compliance with (S)10 hereof for a period of
twelve (12) months, after eliminating the results of all such terminated
restaurants;
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(t) The Unrestricted Subsidiaries shall at any time have aggregate
revenues of greater than twenty-five percent (25%) of the consolidated
revenues of the Borrower at such time;
then, and in any such event, so long as the same may be continuing, the Agent
may, and upon the request of the Majority Banks shall, by notice in writing to
the Borrower declare all amounts owing with respect to this Credit Agreement,
the Revolving Credit Notes and the other Loan Documents and all Reimbursement
Obligations to be, and they shall thereupon forthwith become, immediately due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived by the Borrower; provided that in the
event of any Event of Default specified in (S)(S)13.1(g) or 13.1(h), all such
amounts shall become immediately due and payable automatically and without any
requirement of notice from the Agent or any Bank.
13.2. Termination of Commitments. If any one or more of the Events of
Default specified in (S)13.1(g) or (S)13.1(h) shall occur, any unused portion of
the credit hereunder shall forthwith terminate and each of the Banks shall be
relieved of all further obligations to make Revolving Credit Loans to the
Borrower and the Agent shall be relieved of all further obligations to issue,
extend or renew Letters of Credit. If any other Event of Default shall have
occurred and be continuing, the Agent may and, upon the request of the Majority
Banks, shall, by notice to the Borrower, terminate the unused portion of the
credit hereunder, and upon such notice being given such unused portion of the
credit hereunder shall terminate immediately and each of the Banks shall be
relieved of all further obligations to make Revolving Credit Loans and the Agent
shall be relieved of all further obligations to issue, extend or renew Letters
of Credit. No termination of the credit hereunder shall relieve Holdings, the
Borrower or any of their Subsidiaries of any of the Obligations.
13.3. Remedies. In case any one or more of the Events of Default shall have
occurred and be continuing, and whether or not the Banks shall have accelerated
the maturity of the Revolving Credit Loans pursuant to (S)13.1, each Bank, if
owed any amount with respect to the Revolving Credit Loans or the Reimbursement
Obligations, may, with the consent of the Majority Banks but not otherwise,
proceed to protect and enforce its rights by suit in equity, action at law or
other appropriate proceeding, whether for the specific performance of any
covenant or agreement contained in this Credit Agreement and the other Loan
Documents or any instrument pursuant to which the Obligations to such Bank are
evidenced, including as permitted by applicable law the obtaining of the ex
parte appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of such Bank. No remedy herein conferred upon any Bank
or the Agent or the holder of any Revolving Credit Note or purchaser of any
Letter of Credit Participation is intended to be exclusive of any other remedy
and each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute or any other provision of law.
13.4. Distribution of Collateral Proceeds. In the event that following the
occurrence or during the continuance of any Default or Event of Default, the
Agent or
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any Bank, as the case may be, receives any monies in connection with the
enforcement of any the Security Documents, or otherwise with respect to the
realization upon any of the Collateral, such monies shall be distributed for
application as follows:
(a) first, to the payment of, or (as the case may be) the
reimbursement of the Agent for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Agent in connection with the collection of such monies by
the Agent, for the exercise, protection or enforcement by the Agent of all
or any of the rights, remedies, powers and privileges of the Agent under
this Credit Agreement or any of the other Loan Documents or in respect of
the Collateral or in support of any provision of adequate indemnity to the
Agent against any taxes or liens which by law shall have, or may have,
priority over the rights of the Agent to such monies;
(b) second, to all other Obligations on a pro rata basis; provided,
however, that (i) distributions in respect of such Obligations shall be
made pari passu among Obligations with respect to the Agent's Fee payable
pursuant to (S)5.2 and all other Obligations and (ii) Obligations owing to
the Banks with respect to each type of Obligation such as interest,
principal, fees and expenses, shall be made among the Banks pro rata; and
provided, further, that the Agent may in its discretion make proper
allowance to take into account any Obligations not then due and payable;
(c) third, upon payment and satisfaction in full or other provisions
for payment in full satisfactory to the Banks and the Agent of all of the
Obligations, to the payment of any obligations required to be paid pursuant
to (S)9-504(1)(c) of the Uniform Commercial Code of the Commonwealth of
Massachusetts; and
(d) fourth, the excess, if any, shall be returned to the Borrower or
to such other Persons as are entitled thereto.
14. SETOFF.
------
Regardless of the adequacy of any collateral, during the continuance of any
Event of Default, any deposits or other sums credited by or due from any of the
Banks to the Borrower and any securities or other property of the Borrower in
the possession of such Bank may be applied to or set off by such Bank against
the payment of Obligations and any and all other liabilities, direct, or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of the Borrower to such Bank. Each of the Banks agrees with
each other Bank that (a) if an amount to be set off is to be applied to
Indebtedness of the Borrower to such Bank, other than Indebtedness evidenced by
the Revolving Credit Notes held by such Bank or constituting Reimbursement
Obligations owed to such Bank, such amount shall be applied ratably to such
other Indebtedness and to the Indebtedness evidenced by all such Revolving
Credit Notes held by such Bank or constituting Reimbursement Obligations owed to
such Bank, and (b) if such Bank shall receive from the Borrower, whether by
voluntary payment, exercise of the right of setoff, counterclaim, cross action,
enforcement of the claim evidenced by the Revolving Credit Notes held by, or
constituting Reimbursement Obligations owed to, such Bank by proceedings against
the Borrower at law or in
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equity or by proof thereof in bankruptcy, reorganization, liquidation,
receivership or similar proceedings, or otherwise, and shall retain and apply to
the payment of the Revolving Credit Note or Revolving Credit Notes held by, or
Reimbursement Obligations owed to, such Bank any amount in excess of its ratable
portion of the payments received by all of the Banks with respect to the
Revolving Credit Notes held by, and Reimbursement Obligations owed to, all of
the Banks, such Bank will make such disposition and arrangements with the other
Banks with respect to such excess, either by way of distribution, pro tanto
assignment of claims, subrogation or otherwise as shall result in each Bank
receiving in respect of the Revolving Credit Notes held by it or Reimbursement
Obligations owed it, its proportionate payment as contemplated by this Credit
Agreement; provided that if all or any part of such excess payment is thereafter
recovered from such Bank, such disposition and arrangements shall be rescinded
and the amount restored to the extent of such recovery, but without interest.
15. THE AGENT.
---------
15.1.Authorization. The Agent is authorized to take such action on behalf
of each of the Banks and their affiliates and to exercise all such powers as are
hereunder and under any of the other Loan Documents and any related documents
delegated to the Agent, together with such powers as are reasonably incident
thereto, provided that no duties or responsibilities not expressly assumed
herein or therein shall be implied to have been assumed by the Agent. The
relationship between the Agent and the Banks is and shall be that of agent and
principal only, and nothing contained in this Credit Agreement or any of the
other Loan Documents shall be construed to constitute the Agent as a trustee for
any Bank.
15.2. Employees and Agents. The Agent may exercise its powers and execute
its duties by or through employees, affiliates or agents and shall be entitled
to take, and to rely on, advice of counsel concerning all matters pertaining to
its rights and duties under this Credit Agreement and the other Loan Documents.
The Agent may utilize the services of such Persons as the Agent in its sole
discretion may reasonably determine, and all reasonable fees and expenses of any
such Persons shall be paid by the Borrower.
15.3. No Liability. Neither the Agent nor any of its shareholders,
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever, except that the Agent or such other
Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
15.4. No Representations. The Agent shall not be responsible for the
execution or validity or enforceability of this Credit Agreement, the Revolving
Credit Notes, the Letters of Credit, any of the other Loan Documents or any
instrument at any time constituting, or intended to constitute, collateral
security for the Revolving Credit Notes, or for the value of any such collateral
security or for the validity, enforceability or collectability of any such
amounts owing with respect to the Revolving
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Credit Notes, or for any recitals or statements, warranties or representations
made herein or in any of the other Loan Documents or in any certificate or
instrument hereafter furnished to it by or on behalf of Holdings, the Borrower
or any of their Subsidiaries, or be bound to ascertain or inquire as to the
performance or observance of any of the terms, conditions, covenants or
agreements herein or in any instrument at any time constituting, or intended to
constitute, collateral security for the Revolving Credit Notes or to inspect any
of the properties, books or records of Holdings, the Borrower or any of their
Subsidiaries. The Agent shall not be bound to ascertain whether any notice,
consent, waiver or request delivered to it by the Borrower or any holder of any
of the Revolving Credit Notes shall have been duly authorized or is true,
accurate and complete. The Agent has not made nor does it now make any
representations or warranties, express or implied, nor does it assume any
liability to the Banks, with respect to the credit worthiness or financial
conditions of Holdings, the Borrower or any of their Subsidiaries. Each Bank
acknowledges that it has, independently and without reliance upon the Agent or
any other Bank, and based upon such information and documents as it has deemed
appropriate, made its own credit analysis and decision to enter into this Credit
Agreement.
15.5. Payments.
15.5.1. Payments to Agent. A payment by the Borrower to the Agent
hereunder or any of the other Loan Documents for the account of any Bank
shall constitute a payment to such Bank. The Agent agrees promptly to
distribute to each Bank such Bank's pro rata share of payments received by
the Agent for the account of the Banks except as otherwise expressly
provided herein or in any of the other Loan Documents.
15.5.2. Distribution by Agent. If in the opinion of the Agent the
distribution of any amount received by it in such capacity hereunder, under
the Revolving Credit Notes or under any of the other Loan Documents might
involve it in liability, it may refrain from making distribution until its
right to make distribution shall have been adjudicated by a court of
competent jurisdiction. If a court of competent jurisdiction shall adjudge
that any amount received and distributed by the Agent is to be repaid, each
Person to whom any such distribution shall have been made shall either
repay to the Agent its proportionate share of the amount so adjudged to be
repaid or shall pay over the same in such manner and to such Persons as
shall be determined by such court.
15.5.3. Delinquent Banks. Notwithstanding anything to the contrary
contained in this Credit Agreement or any of the other Loan Documents, any
Bank that fails (i) to make available to the Agent its pro rata share of
any Revolving Credit Loan or to purchase any Letter of Credit Participation
or (ii) to comply with the provisions of (S)14 with respect to making
dispositions and arrangements with the other Banks, where such Bank's share
of any payment received, whether by setoff or otherwise, is in excess of
its pro rata share of such payments due and payable to all of the Banks, in
each case as, when and to the full extent required by the provisions of
this Credit Agreement, shall be deemed delinquent (a "Delinquent Bank") and
shall be deemed a Delinquent Bank until such time as such delinquency is
satisfied. A Delinquent Bank shall be deemed
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to have assigned any and all payments due to it from the Borrower, whether
on account of outstanding Revolving Credit Loans, Unpaid Reimbursement
Obligations, interest, fees or otherwise, to the remaining nondelinquent
Banks for application to, and reduction of, their respective pro rata
shares of all outstanding Revolving Credit Loans and Unpaid Reimbursement
Obligations. The Delinquent Bank hereby authorizes the Agent to distribute
such payments to the nondelinquent Banks in proportion to their respective
pro rata shares of all outstanding Revolving Credit Loans and Unpaid
Reimbursement Obligations. A Delinquent Bank shall be deemed to have
satisfied in full a delinquency when and if, as a result of application of
the assigned payments to all outstanding Revolving Credit Loans and Unpaid
Reimbursement Obligations of the nondelinquent Banks, the Banks' respective
pro rata shares of all outstanding Revolving Credit Loans and Unpaid
Reimbursement Obligations have returned to those in effect immediately
prior to such delinquency and without giving effect to the nonpayment
causing such delinquency.
15.6. Holders of Revolving Credit Notes. The Agent may deem and treat the
payee of any Revolving Credit Note or the purchaser of any Letter of Credit
Participation as the absolute owner or purchaser thereof for all purposes hereof
until it shall have been furnished in writing with a different name by such
payee or by a subsequent holder, assignee or transferee.
15.7. Indemnity. The Banks ratably agree hereby to indemnify and hold
harmless the Agent and its affiliates from and against any and all claims,
actions and suits (whether groundless or otherwise), losses, damages, costs,
expenses (including any expenses for which the Agent has not been reimbursed by
the Borrower as required by (S)16), and liabilities of every nature and
character arising out of or related to this Credit Agreement, the Revolving
Credit Notes, or any of the other Loan Documents or the transactions
contemplated or evidenced hereby or thereby, or the Agent's actions taken
hereunder or thereunder, except to the extent that any of the same shall be
directly caused by the Agent's willful misconduct or gross negligence.
15.8. Agent as Bank. In its individual capacity, BKB shall have the same
obligations and the same rights, powers and privileges in respect to its
Commitment and the Revolving Credit Loans made by it, and as the holder of any
of the Revolving Credit Notes and as the purchaser of any Letter of Credit
Participations, as it would have were it not also the Agent.
15.9. Resignation. The Agent may resign at any time by giving sixty (60)
days prior written notice thereof to the Banks and the Borrower. Upon any such
resignation, the Majority Banks shall have the right to appoint a successor
Agent. Unless a Default or Event of Default shall have occurred and be
continuing, such successor Agent shall be reasonably acceptable to the Borrower.
If no successor Agent shall have been so appointed by the Majority Banks and
shall have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Banks, appoint a successor Agent, which shall be a financial institution
having a rating of not less than A or its equivalent by Standard & Poor's
Corporation. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall
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thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder. After any retiring Agent's
resignation, the provisions of this Credit Agreement and the other Loan
Documents shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Agent.
15.10. Notification of Defaults and Events of Default. Each Bank hereby
agrees that, upon learning of the existence of a Default or an Event of Default,
it shall promptly notify the Agent thereof. The Agent hereby agrees that upon
receipt of any notice under this (S)15.10 it shall promptly notify the other
Banks of the existence of such Default or Event of Default.
15.11 Duties in the Case of Enforcement. In case one of more Events of
Default have occurred and shall be continuing, and whether or not acceleration
of the Obligations shall have occurred, the Agent shall, if (a) so requested by
the Majority Banks and (b) the Banks have provided to the Agent such additional
indemnities and assurances against expenses and liabilities as the Agent may
reasonably request, proceed to enforce the provisions of the Security Documents
authorizing the sale or other disposition of all or any part of the Collateral
and exercise all or any such other legal and equitable and other rights or
remedies as it may have in respect of such Collateral. The Majority Banks may
direct the Agent in writing as to the method and the extent of any such sale or
other disposition, the Banks hereby agreeing to indemnify and hold the Agent,
harmless from all liabilities incurred in respect of all actions taken or
omitted in accordance with such directions, provided that the Agent need not
comply with any such direction to the extent that the Agent reasonably believes
the Agent's compliance with such direction to be unlawful or commercially
unreasonable in any applicable jurisdiction.
16. EXPENSES.
--------
Whether or not the transactions contemplated hereby shall be consummated,
and subject to (S)8.9.3 hereof, the Borrower promises to pay (a) the reasonable
costs of (i) producing and reproducing this Credit Agreement, the other Loan
Documents and the other agreements and instruments mentioned herein and (ii) any
taxes (including any interest and penalties in respect thereto), filing fees or
recording fees or taxes payable by any Bank (other than taxes based upon the
Bank's net income) on or with respect to the transactions contemplated by this
Credit Agreement or the other Loan Documents (the Borrower hereby agreeing to
indemnify each Bank with respect thereto), (b) the documented fees, expenses and
disbursements of the Agent's Special Counsel or any local counsel to the Agent
incurred in connection with the preparation of this Credit Agreement, the other
Loan Documents and other instruments mentioned herein, each closing hereunder,
amendments, modifications, approvals, consents or waivers hereto or hereunder
and the syndication and the termination hereof, (c) all reasonable fees,
expenses and disbursements incurred by BKB or its affiliates in connection with
the syndication of its Commitment hereunder, provided that the Borrower shall
not bear the costs of syndication hereunder which are in excess of $5,000; and
(d) all out-of-pocket expenses (including reasonable attorneys' fees and costs),
incurred by any Bank, its affiliates or the Agent or its affiliates in
connection with (i) the enforcement of or
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preservation of rights under any this Credit Agreement, the Revolving Credit
Notes and the other Loan Documents against Holdings, the Borrower or any of
their Subsidiaries or the administration thereof after the occurrence of a
Default or Event of Default and (ii) in connection with any litigation,
proceeding or dispute whether arising hereunder or under the other Loan Document
or arising out of the transactions contemplated hereby or thereby. The covenants
of this (S)16 shall survive payment or satisfaction of all other Obligations.
17. INDEMNIFICATION.
---------------
The Borrower further agrees to indemnify and hold harmless the Agent and
the Banks as well as each such Person's shareholders, directors, agents,
officers, Subsidiaries and affiliates, from and against all damages, losses,
settlement payments, obligations, liabilities, claims, actions or causes of
action, and costs and expenses incurred, suffered, sustained or required to be
paid by an indemnified party by reason of or resulting from the transactions
contemplated hereby, except any of the foregoing which result from the gross
negligence or willful misconduct of the indemnified party. In any investigation,
proceeding or litigation, or the preparation therefor, each Bank and the Agent
shall be entitled to select its own counsel and, in addition to the foregoing
indemnity, the Borrower agrees to pay promptly the fees and expenses of such
counsel. If, and to the extent that the obligations of the Borrower under this
(S)17 are unenforceable for any reason, the Borrower hereby agrees to make the
maximum contribution to the payment in satisfaction of such obligations which is
permissible under applicable law. The covenants contained in this (S)17 shall
survive payment or satisfaction in full of all other Obligations.
18. SURVIVAL OF COVENANTS, ETC.
-------- -- ---------- ---
All covenants, agreements, representations and warranties made herein, in
the Revolving Credit Notes, in any of the other Loan Documents or in any
documents or other papers delivered by or on behalf of Holdings, the Borrower or
any of their Subsidiaries pursuant hereto shall be deemed to have been relied
upon by the Banks and the Agent, notwithstanding any investigation heretofore or
hereafter made by any of them, and shall survive the making by the Banks of any
of the Revolving Credit Loans and the issuance, extension or renewal of any
Letters of Credit, as herein contemplated, and shall continue in full force and
effect so long as any Letter of Credit or any amount due under this Credit
Agreement or the Revolving Credit Notes or any of the other Loan Documents
remains outstanding or any Bank has any obligation to make any Revolving Credit
Loans or the Agent has any obligation to issue, extend or renew any Letter of
Credit, and for such further time as may be otherwise expressly specified in
this Credit Agreement. All statements contained in any certificate or other
paper delivered to any Bank or the Agent at any time by or on behalf of
Holdings, the Borrower or any of their Subsidiaries pursuant hereto or in
connection with the transactions contemplated hereby shall constitute
representations and warranties by Holdings, the Borrower or such Subsidiary
hereunder.
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19. ASSIGNMENT AND PARTICIPATION.
---------- --- -------------
19.1. Conditions to Assignment by Banks. Except as provided herein, each
Bank may assign to one or more Eligible Assignees all or a portion of its
interests, rights and obligations under this Credit Agreement (including all or
a portion of its Commitment Percentage with respect to Revolving Credit Loans
and the same portion of the Revolving Credit Loans at the time owing to it, the
Revolving Credit Notes held by it and its participating interest in the risk
relating to any Letters of Credit); provided that (a) each of the Agent and the
Borrower shall have given its prior written consent to such assignment, which
consent, in the case of the Borrower, will not be unreasonably withheld, (b)
each such assignment shall be of a constant, and not a varying, percentage of
all the assigning Bank's rights and obligations in respect of the Revolving
Credit Loans under this Credit Agreement, (c) each assignment shall be in an
amount of no less than $5,000,000, or, if less, the entire remaining amount of
the assigning Bank's interest in the Revolving Credit Loans, or a larger
integral multiple of $1,000,000, and (d) the parties to such assignment shall
execute and deliver to the Agent, for recording in the Register (as hereinafter
defined), an Assignment and Acceptance, substantially in the form of Exhibit H
hereto (an "Assignment and Acceptance"), together with any Revolving Credit
Notes subject to such assignment. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five (5) Business Days after
the execution thereof, (i) the assignee thereunder shall be a party hereto and,
to the extent provided in such Assignment and Acceptance, have the rights and
obligations of a Bank hereunder, and (ii) the assigning Bank shall, to the
extent provided in such assignment and upon payment to the Agent of the
registration fee referred to in (S)19.3, be released from its obligations under
this Credit Agreement.
19.2. Certain Representations and Warranties; Limitations; Covenants. By
executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:
(a) other than the representation and warranty that it is the legal
and beneficial owner of the interest being assigned thereby free and clear
of any adverse claim, the assigning Bank makes no representation or
warranty, express or implied, and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with
this Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Credit Agreement, the other Loan
Documents or any other instrument or document furnished pursuant hereto or
the attachment, perfection or priority of any security interest or
mortgage,
(b) the assigning Bank makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower and its Subsidiaries or any other Person primarily or secondarily
liable in respect of any of the Obligations, or the performance or
observance by the Borrower and its Subsidiaries or any other Person
primarily or secondarily liable in respect of any of the Obligations of any
of their obligations under this
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Credit Agreement or any of the other Loan Documents or any other instrument
or document furnished pursuant hereto or thereto;
(c) such assignee confirms that it has received a copy of this Credit
Agreement, together with copies of the most recent financial statements
referred to in (S)7.4 and (S)8.4 and such other documents and information
as it has deemed appropriate to make its own credit analysis and decision
to enter into such Assignment and Acceptance;
(d) such assignee will, independently and without reliance upon the
assigning Bank, the Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Credit
Agreement;
(e) such assignee represents and warrants that it is an Eligible
Assignee and that, on the effective date of such Assignment and Acceptance,
the circumstances described in (S)(S)5.7 and 5.8 hereof are not applicable
to such assignee;
(f) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Credit
Agreement and the other Loan Documents as are delegated to the Agent by the
terms hereof or thereof, together with such powers as are reasonably
incidental thereto;
(g) such assignee agrees that it will perform in accordance with
their terms all of the obligations that by the terms of this Credit
Agreement are required to be performed by it as a Bank;
(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; and
(i) such assignee acknowledges that it has made arrangements with the
assigning Bank satisfactory to such assignee with respect to its pro rata
share of Letter of Credit Fees in respect of outstanding Letters of Credit.
19.3. Register. The Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list (the "Register") for
the recordation of the names and addresses of the Banks and the Commitment
Percentage of, and principal amount of the Revolving Credit Loans owing to and
Letter of Credit Participations purchased by, the Banks from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, the Agent and the Banks may treat each Person whose name is
recorded in the Register as a Bank hereunder for all purposes of this Credit
Agreement. The Register shall be available for inspection by the Borrower and
the Banks at any reasonable time and from time to time upon reasonable prior
notice. Upon each such recordation, the assigning Bank agrees to pay to the
Agent a registration fee in the sum of $5,000.00.
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19.4. New Revolving Credit Notes. Upon its receipt of an Assignment and
Acceptance executed by the parties to such assignment, together with each
Revolving Credit Note subject to such assignment, the Agent shall (a) record the
information contained therein in the Register, and (b) give prompt notice
thereof to the Borrower and the Banks (other than the assigning Bank). Within
five (5) Business Days after receipt of such notice, the Borrower, at its own
expense, shall execute and deliver to the Agent, in exchange for each
surrendered Revolving Credit Note, a new Revolving Credit Note to the order of
such Eligible Assignee in an amount equal to the amount assumed by such Eligible
Assignee pursuant to such Assignment and Acceptance and, if the assigning Bank
has retained some portion of its obligations hereunder, a new Revolving Credit
Note to the order of the assigning Bank in an amount equal to the amount
retained by it hereunder. Such new Revolving Credit Notes shall provide that
they are replacements for the surrendered Revolving Credit Notes, shall be in an
aggregate principal amount equal to the aggregate principal amount of the
surrendered Revolving Credit Notes, shall be dated the effective date of such in
Assignment and Acceptance and shall otherwise be substantially the form of the
assigned Revolving Credit Notes. Within five (5) days of issuance of any new
Revolving Credit Notes pursuant to this (S)19.4, the Borrower shall, if
requested by the assigning Bank or the assignee Bank, deliver an opinion of
counsel, addressed to the Banks and the Agent, relating to the due
authorization, execution and delivery of such new Revolving Credit Notes and the
legality, validity and binding effect thereof, in form and substance
satisfactory to the Banks. The surrendered Revolving Credit Notes shall be
cancelled and returned to the Borrower.
19.5. Participations. Each Bank may sell participations to one or more
banks or other entities in all or a portion of such Bank's rights and
obligations under this Credit Agreement and the other Loan Documents; provided
that (a) each such participation shall be in an amount of not less than
$5,000,000, (b) any such sale or participation shall not affect the rights and
duties of the selling Bank hereunder to the Borrower and (c) the only rights
granted to the participant pursuant to such participation arrangements with
respect to waivers, amendments or modifications of the Loan Documents shall be
the rights to approve waivers, amendments or modifications that would forgive
any principal of or reduce the interest rate on any Revolving Credit Loans,
extend the term or increase the amount of the Commitment of such Bank as it
relates to such participant, reduce the amount of any commitment fees or Letter
of Credit Fees to which such participant is entitled or extend any regularly
scheduled payment date for principal or interest.
19.6. Disclosure. The Borrower agrees that in addition to disclosures made
in accordance with standard and customary banking practices any Bank may
disclose information obtained by such Bank pursuant to this Credit Agreement to
assignees or participants and potential assignees or participants hereunder;
provided that such assignees or participants or potential assignees or
participants shall agree (a) to treat in confidence such information unless such
information otherwise becomes public knowledge, (b) not to disclose such
information to a third party, except as required by law or legal process and (c)
not to make use of such information for purposes of transactions unrelated to
such contemplated assignment or participation.
<PAGE>
-90-
19.7. Assignee or Participant Affiliated with the Borrower. If any assignee
Bank is an Affiliate of the Borrower, then any such assignee Bank shall have no
right to vote as a Bank hereunder or under any of the other Loan Documents for
purposes of granting consents or waivers or for purposes of agreeing to
amendments or other modifications to any of the Loan Documents or for purposes
of making requests to the Agent pursuant to (S)13.1 or (S)13.2, and the
determination of the Majority Banks shall for all purposes of this Credit
Agreement and the other Loan Documents be made without regard to such assignee
Bank's interest in any of the Revolving Credit Loans. If any Bank sells a
participating interest in any of the Revolving Credit Loans or Reimbursement
Obligations to a participant, and such participant is the Borrower or an
Affiliate of the Borrower, then such transferor Bank shall promptly notify the
Agent of the sale of such participation. A transferor Bank shall have no right
to vote as a Bank hereunder or under any of the other Loan Documents for
purposes of granting consents or waivers or for purposes of agreeing to
amendments or modifications to any of the Loan Documents or for purposes of
making requests to the Agent pursuant to (S)13.1 or (S)13.2 to the extent that
such participation is beneficially owned by the Borrower or any Affiliate of the
Borrower, and the determination of the Majority Banks shall for all purposes of
this Agreement and the other Loan Documents be made without regard to the
interest of such transferor Bank in the Revolving Credit Loans to the extent of
such participation.
19.8. Miscellaneous Assignment Provisions. Any assigning Bank shall retain
its rights to be indemnified pursuant to (S)17 with respect to any claims or
actions arising prior to the date of such assignment. If any assignee Bank is
not incorporated under the laws of the United States of America or any state
thereof, it shall, prior to the date on which any interest or fees are payable
hereunder or under any of the other Loan Documents for its account, deliver to
the Borrower and the Agent certification as to its exemption from deduction or
withholding of any United States federal income taxes. If BKB transfers all of
its interest, rights and obligations under this Credit Agreement, the Agent
shall, in consultation with the Borrower and with the consent of the Borrower
and the Majority Banks, appoint another Bank to act as the Reference Bank
hereunder. Anything contained in this (S)19 to the contrary notwithstanding, any
Bank may at any time pledge all or any portion of its interest and rights under
this Credit Agreement (including all or any portion of its Revolving Credit
Notes) to any of the twelve Federal Reserve Banks organized under (S)4 of the
Federal Reserve Act, 12 U.S.C. (S)341. No such pledge or the enforcement thereof
shall release the pledgor Bank from its obligations hereunder or under any of
the other Loan Documents.
19.9. Assignment by Borrower. The Borrower shall not assign or transfer any
of its rights or obligations under any of the Loan Documents without the prior
written consent of each of the Banks.
20. NOTICES, ETC.
-----------------
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement or the Revolving Credit Notes or any Letter of Credit
Applications shall be in writing and shall be delivered in hand, mailed by
United States registered or certified first
<PAGE>
-91-
class mail, postage prepaid, sent by overnight courier, or sent by telegraph,
telecopy, facsimile or telex and confirmed by delivery via courier or postal
service, addressed as follows:
(a) if to the Borrower, at 2215 Enterprise Drive, Suite 1502,
Westchester, Illinois 60154, Attention: Joel Aaseby, or at such other
address for notice as the Borrower shall last have furnished in writing to
the Person giving the notice;
(b) if to the Agent, at 100 Federal Street, Boston, Massachusetts
02110, USA, Attention: Timothy M. Barns, Division Executive, or such other
address for notice as the Agent shall last have furnished in writing to the
Person giving the notice; and
(c) if to any Bank, at such Bank's address set forth on Schedule 1
hereto, or such other address for notice as such Bank shall have last
furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or made
and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile and
(ii) if sent by registered or certified first-class mail, postage prepaid, on
the third Business Day following the mailing thereof.
21. GOVERNING LAW.
--------------
THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWER
AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT
BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN (S)20. THE
BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
22. HEADINGS.
---------
The captions in this Credit Agreement are for convenience of reference only
and shall not define or limit the provisions hereof.
<PAGE>
-92-
23. COUNTERPARTS.
This Credit Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when
executed and delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Credit Agreement it shall not be
necessary to produce or account for more than one such counterpart signed by the
party against whom enforcement is sought.
24. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection herewith
or therewith express the entire understanding of the parties with respect to the
transactions contemplated hereby. Neither this Credit Agreement nor any term
hereof may be changed, waived, discharged or terminated, except as provided in
(S)26.
25. WAIVER OF JURY TRIAL.
Each of Holdings and the Borrower hereby waives its right to a jury trial
with respect to any action or claim arising out of any dispute in connection
with this Credit Agreement, the Revolving Credit Notes or any of the other Loan
Documents, any rights or obligations hereunder or thereunder or the performance
of which rights and obligations. Except as prohibited by law, each of Holdings
and the Borrower hereby waives any right it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. Each of Holdings and the Borrower (a) certifies that no
representative, agent or attorney of any Bank or the Agent has represented,
expressly or otherwise, that such Bank or the Agent would not, in the event of
litigation, seek to enforce the foregoing waivers and (b) acknowledges that the
Agent and the Banks have been induced to enter into this Credit Agreement, the
other Loan Documents to which it is a party and the Subordination Documents to
which it is a party by, among other things, the waivers and certifications
contained herein.
26. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Any consent or approval required or permitted by this Credit Agreement to
be given by all of the Banks may be given, and any term of this Credit
Agreement, the other Loan Documents or any other instrument related hereto or
mentioned herein may be amended, and the performance or observance by Holdings,
the Borrower or any of their Subsidiaries of any terms of this Credit Agreement,
the other Loan Documents or such other instrument or the continuance of any
Default or Event of Default may be waived (either generally or in a particular
instance and either retroactively or prospectively) with, but only with, the
written consent of the Borrower and the written consent of the Majority Banks.
Notwithstanding the foregoing, the rate of interest on the Revolving Credit
Notes, the maturity of or extension of scheduled payments on the Revolving
Credit Notes, the release of all or substantially all of the Collateral, the
amount of the Commitments of the Banks (except as expressly provided for in
(S)2.1.2 hereof) and the amount of commitment fee or Letter of Credit Fees
hereunder may not
<PAGE>
-93-
be changed without the written consent of the Borrower and the written consent
of each Bank; the definition of Majority Banks and this (S)26 may not be amended
without the written consent of all of the Banks; and the amount of the Agent's
Fee or any Letter of Credit Fees payable for the Agent's account and (S)16 may
not be amended without the written consent of the Agent. No waiver shall extend
to or affect any obligation not expressly waived or impair any right consequent
thereon. No course of dealing or delay or omission on the part of the Agent or
any Bank in exercising any right shall operate as a waiver thereof or otherwise
be prejudicial thereto. No notice to or demand upon the Borrower shall entitle
the Borrower to other or further notice or demand in similar or other
circumstances.
27. SEVERABILITY.
The provisions of this Credit Agreement are severable and if any one clause
or provision hereof shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Credit Agreement in any jurisdiction.
28. TRANSITIONAL ARRANGEMENTS
28.1. Original Credit Agreement Superseded. This Credit Agreement shall on
the Closing Date supersede the Original Credit Agreement in its entirety, except
as provided in this (S)28. On the Closing Date, the rights and obligations of
the parties evidenced by the Original Credit Agreement shall be evidenced by the
Credit Agreement and other Loan Documents, the "Revolving Credit Loans" as
defined in the Original Credit Agreement shall be converted to Revolving Credit
Loans as defined herein, and all outstanding letters of credit issued by the
Agent for the account of the Borrower prior to the Closing Date shall, for the
purposes of this Credit Agreement, be Letters of Credit.
28.2. Return and Cancellation of Revolving Credit Notes. As soon as
reasonably practicable after its receipt of its Revolving Credit Note hereunder
on the Closing Date, the Banks will promptly return to the Borrower, marked
"Substituted" or "Cancelled", as the case may be, any notes of the Borrower held
by the Banks pursuant to the Original Credit Agreement.
28.3. Interest and Fees Under Superseded Agreement. All interest and fees
and expenses, if any, owing or accruing under or in respect of the Original
Credit Agreement through the Closing Date shall be calculated as of the Closing
Date (prorated in the case of any fractional periods), and shall be paid in
accordance with the method, and on the dates, specified in the Original Credit
Agreement, as if the Original Credit Agreement were still in effect. Commencing
on the Closing Date, the commitment fees shall be payable by the Borrower to the
Agent for the account of the Banks in accordance with (S)2.2.
<PAGE>
-94-
IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as a sealed instrument as of the date first set forth above.
NATIONAL RESTAURANT ENTERPRISES, INC.
By:
--------------------------------------
Name:
Title:
AMERIKING, INC.
By:
--------------------------------------
Name:
Title:
BANKBOSTON, N.A. (f/k/a The First National Bank of
Boston), individually and as Agent
By:
--------------------------------------
Name:
Director
<PAGE>
AmeriKing, Inc.
Calculation of Earnings per Common Share
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Six Periods Three Periods
December 31, January 2, April 1, April 2,
1996 to 1996 to 1997 to 1996 to
June 30, 1997 July 1, 1996 June 30, 1997 July 1, 1996
<S> <C> <C> <C> <C>
Net income before taxes $ 699 $ 677 $ 1,762 $ 1,337
Earnings available to stockholders
Dividends
Preferred Stock (225) (225) (113) (113)
Senior Preferred Stock (2,002) (1,017)
Amortization of issuance costs (60) (30)
------- -------
Earnings available to common stockholders (1,588) 452 602 1,224
Weighted average number of shares outstanding 897.34 863.29 901.39 863.29
Fully diluted weighted average number of shares
outstanding 999.99 969.99 999.99 969.99
Net income per common share (weighted average) $ (1.77) $ 0.52 $ 0.67 $ 1.29
Net income per common share (fully diluted) $ (1.59) $ 0.47 $ 0.60 $ 1.15
Total Shares
------------
Weighted average number of common shares:
Original shares 863.29 863.29 863.29 863.29
Option shares 4.05 8.10
Common stock units 30.00 30.00 30.00 30.00
------- ------- ------- -------
Total 897.34 893.29 901.39 893.29
Fully diluted weighted average number of common
shares:
Original shares 969.99 969.99 969.99 969.99
Common stock units 30.00 30.00 30.00 30.00
------- ------- ------- -------
Total 999.99 999.99 999.99 999.99
</TABLE>
<PAGE>
AmeriKing, Inc.
Calculation of Ratio of Earnings to Fixed Charges
(Dollars in thousands)
<TABLE>
<CAPTION>
Three Periods Ended Three Periods Ended
June 30, 1997 July 1, 1996
W/O PIK With PIK W/O PIK With PIK
Dividends Dividends Dividends Dividends
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
EARNINGS
Loss before provision for income taxes $1,762 $1,762 $1,337 $1,337
Interest expense 2,945 2,945 3,018 3,018
Amortization of deferred financing costs 137 137 240 240
Portion of rents representative of interest 1,233 1,233 1,183 1,183
Preferred stock PIK dividends 113 113
Total Earnings $6,077 $6,190 $5,778 $5,891
FIXED CHARGES
Interest expense $2,945 $2,945 $3,018 $3,018
Amortization of deferred financing costs 137 137 240 240
Portion of rents representative of interest 1,233 1,233 1,183 1,183
Preferred stock PIK dividends 113 113
Total Fixed Charges $4,315 $4,428 $4,441 $4,554
RATIO OF EARNINGS TO FIXED CHARGES 1.41 1.40 1.30 1.29
</TABLE>
AmeriKing, Inc.
Calculation of Ratio of Earnings to Fixed Charges
(Dollars in thousands)
<TABLE>
<CAPTION>
Six Periods Ended Six Periods Ended
June 30, 1997 July 1, 1996
W/O PIK With PIK W/O PIK With PIK
Dividends Dividends Dividends Dividends
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
EARNINGS
Income before provision for income taxes $ 699 $ 699 $ 677 $ 677
Interest expense 5,929 5,929 5,760 5,760
Amortization of deferred financing costs 274 274 449 449
Portion of rents representative of interest 2,476 2,476 2,256 2,256
Preferred stock PIK dividends 225 225
Total Earnings $9,378 $9,603 $9,142 $9,367
FIXED CHARGES
Interest expense $5,929 $5,929 $5,760 $5,760
Amortization of deferred financing costs 274 274 449 449
Portion of rents representative of interest 2,476 2,476 2,256 2,256
Preferred stock PIK dividends 225 225
Total Fixed Charges $8,679 $8,904 $8,465 $8,690
RATIO OF EARNINGS TO FIXED CHARGES 1.08 1.08 1.08 1.08
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the fiscal
1997 Consolidated Financial Statements of Ameriking, Inc. and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-29-1997
<PERIOD-END> JUN-30-1997
<CASH> 4,647
<SECURITIES> 0
<RECEIVABLES> 746
<ALLOWANCES> 0
<INVENTORY> 1,455
<CURRENT-ASSETS> 8,662
<PP&E> 56,304
<DEPRECIATION> 11,016
<TOTAL-ASSETS> 177,807
<CURRENT-LIABILITIES> 17,903
<BONDS> 128,794
32,264
0
<COMMON> 9
<OTHER-SE> (1,178)
<TOTAL-LIABILITY-AND-EQUITY> 177,807
<SALES> 54,395
<TOTAL-REVENUES> 54,395
<CGS> 17,810
<TOTAL-COSTS> 48,862
<OTHER-EXPENSES> 645
<LOSS-PROVISION> 48
<INTEREST-EXPENSE> 2,984
<INCOME-PRETAX> 1,762
<INCOME-TAX> 705
<INCOME-CONTINUING> 1,057
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,057
<EPS-PRIMARY> 0.67
<EPS-DILUTED> 0.60
</TABLE>
